One of the Results of the Restrictive Monetary Policy Adopted

question 17

Multiple Choice

One of the results of the restrictive monetary policy adopted by the Bank of Canada in the early 1980s was that

• A)inflation fell dramatically and real GDP remained at full employment levels.
• B)inflation fell dramatically,but was accompanied by a major recession.
• C)inflation remained over 10%,but the Bank of Canada avoided a major recession.
• D)inflation remained over 10% and there was a major recession.
• E)unemployment fell,but inflation accelerated due to higher interest rates.

---

Definitions:

LIFO Inventory Costing

An inventory valuation method that assumes the items of inventory most recently purchased or produced are sold first, with costs of the oldest inventory remaining in stock.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of materials and labor.

Annual Accounting Period

An annual accounting period is a 12-month period over which a company reports its financial performance and prepares financial statements.

LIFO Reserve

The difference between the cost of inventory calculated using the Last-In, First-Out (LIFO) method and the cost using the First-In, First-Out (FIFO) method.