Starting from Long-Run Equilibrium,the Long-Run Impact(s)of an "Easing" of Monetary

question 179

Multiple Choice

Starting from long-run equilibrium,the long-run impact(s) of an "easing" of monetary policy by the Bank of Canada (a downward shift in the monetary policy rule) ,compared to the original equilibrium,would be

• A) higher inflation.
• B) higher output.
• C) higher inflation and higher output.
• D) lower inflation and lower output.
• E) no change in inflation or output.

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Definitions:

Axes

References in a plural context, typically meaning more than one of an imaginary line about which a body rotates or a reference line for the measurement of coordinates.

Sessile

Permanently attached to one location (e.g., coral animals).

Beating Flagella

Flagella that exhibit a whip-like motion to propel cells through liquid environments, common in many single-celled organisms and the sperm of many multicellular organisms.

Motile Larvae

Larval forms of certain animals capable of movement, often playing a crucial role in dispersal and the life cycle.