If the Bank of Canada were to change from an expansionary to contractionary monetary policy,this would be an example of:
A)unsystematic risk.
B)systematic risk.
C)independent risk.
D)diversification risk.
E)unwanted risk.

Question

Quizplus · Accepted Answer

A change in the monetary policy of the central bank (Bank of Canada) affects the entire economy and creates systematic risk. Systematic risk refers to the risk that affects the entire market or asset class, rather than specific companies or assets. In this case, the change in monetary policy affects the amount of money in circulation, interest rates, and other economic variables, which in turn affects investments, businesses, and consumers.

If the Bank of Canada Were to Change from an Expansionary