The Bank of Canada's Policy of Inflation Targeting Represents I

question 79

Multiple Choice

The Bank of Canada's policy of inflation targeting represents I: an additional automatic stabilizer when the economy is hit with demand shocks;
II: an additional automatic stabilizer when the economy is hit with supply shocks.

• A) I is true; II is not.
• B) II is true; I is not.
• C) Both I and II are true.
• D) Neither I nor II is true.

---

Definitions:

Coffee Prices

Coffee prices refer to the cost of coffee beans in the market, which can fluctuate based on factors like supply and demand, weather conditions, and geopolitical events.

Coffee Surpluses

Occurs when the quantity of coffee produced exceeds the quantity demanded, leading to a decrease in price.

Price Ceiling

A government-imposed limit on how high a price is charged for a product.

Oil Products

Refined products derived from crude oil processing, such as gasoline, diesel, jet fuel, and heating oil.