If the Bank of Canada Were to Shift Its Policy

question 95

Multiple Choice

If the Bank of Canada were to shift its policy reaction function rightward (i.e. ,an easing of monetary policy) ,the

• A) IA line would shift upward,causing an increase in the inflation rate.
• B) LRAS line would shift upward,causing an increase in the inflation rate.
• C) IA line would shift downward,causing a decrease in the inflation rate.
• D) ADI curve would shift to the left.
• E) ADI curve would shift to the right.

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Definitions:

Monetary Policy

A strategy used by a country's central bank to control the money supply and interest rates in order to influence economic activity.

Aggregate Demand

The total demand for all goods and services in an economy at a given time and price level.

Studies

The act of devoting time and attention to acquiring knowledge on an academic subject, particularly through books.

Tax Cuts

Refers to reductions in the rates at which individuals or corporations are taxed, intended to stimulate economic growth or achieve other policy objectives.