The Canadian Experience with Inflation and Unemployment in the Early

question 83

Multiple Choice

The Canadian experience with inflation and unemployment in the early 1990s has this to say about policy rules:

• A) a central bank independent of political pressure may thereby not be serving the public's politically-revealed preferences.
• B) a central bank bowing to political pressure cannot get the inflation rate below the unemployment rate.
• C) a constant-growth-rate-of-money rule cannot stabilize inflation if unemployment is allowed to vary substantially.
• D) a constant-growth-rate-of-high-powered-money rule allows too much variation in the growth of the actual money supply to hold down inflation.

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