If the Bank of Canada Has Discretion to Choose Its

question 76

Multiple Choice

If the Bank of Canada has discretion to choose its own policy and announces a policy of low inflation, then:

• A)the policymaker is required to make the money supply grow at a low rate.
• B)private economic agents are sure to believe the announcement because it is credible.
• C)private economic actors are likely to discount the policy because the Bank of Canada has an incentive to renege on its policy once expectations are formed.
• D)the Bank of Canada is certain to renege on its policy once expectations are formed because then it can lower unemployment with minimum inflation.

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Zero-Argument Constructor

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