Choose the statement that is incorrect.
A)The Bank of Canada's strategy of inflation rate targeting that keeps the inflation rate low and stable makes the maximum possible contribution towards achieving full employment and sustained economic growth.
B)The Bank of Canada's strategy of inflation rate targeting has resulted in an inflation rate that is 0.3 percent per year below the core CPI inflation rate since 2000.
C)The last time the Bank of Canada created a recession was at the beginning of the 1990s when it was faced with the threat of ongoing double-digit inflation.
D)The Bank of Canada's monetary policy is sensitive to the state of employment while maintaining its focus on achieving its inflation target.
E)The inflation-control target uses the Consumer Price Index as the measure of inflation.
Refer to Fact 30.1.1. In the inflation control agreement, the Government of Canada and the Bank of Canada agree to all of the following except that
A)the target will continue to be defined in terms of the 12-month rate of change in the total CPI.
B)the inflation target will continue to be 2 percent.
C)the agreement will run until December 31, 2016.
D)if the CPI becomes too volatile, in the future the target will be defined in terms of the 12-month rate of change in the core CPI.
E)the inflation-control range is 1 percent to 3 percent a year.
Refer to Fact 30.1.1. Choose the statement that is incorrect.
A)It is important to renew the agreement because the target provides an anchor for low inflation expectations.
B)It is important to renew the agreement because knowing that the Bank of Canada is striving to reach the target makes the short-run output-inflation tradeoff as favourable as possible.
C)It is important to renew the agreement because with the agreement the inflation rate will always remain between 1 and 3 percent a year.
D)Obstacles to the renewal of the agreement may occur because some critics argue that by focusing on inflation, the Bank sometimes permits the unemployment rate to rise.
E)Obstacles to the renewal of the agreement may occur because some critics argue that by focusing on inflation, the Bank sometimes permits real GDP growth to suffer.
As the sole issuer of Canadian money, the Bank of Canada can set any one of three variables:
A)the monetary base, the exchange rate, and the short-term interest rate.
B)the money base, the interest rate, and the unemployment rate.
C)the rate of inflation, the interest rate, and the unemployment rate.
D)the exchange rate, the interest rate, and the inflation rate.
E)the inflation rate, the unemployment rate, and the real economic growth rate.