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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Definitions:

Marshall Plan

A U.S.-initiated program providing massive financial aid to Western Europe after World War II to rebuild economies and prevent the spread of communism.

Communism

A political and economic ideology that advocates for a classless society in which all property is publicly owned, and each person works and is paid according to their abilities and needs.

European Economic Community

An economic organization that aimed to bring about economic integration among its member states, a precursor to the European Union.

Trade Barriers

Measures implemented by countries to regulate or restrict trade with other countries, including tariffs, quotas, and import bans, typically aimed at protecting domestic industries.