Which of the following statements is true? A.The Bank of Canada usually avoids i
ID: 1118610 • Letter: W
Question
Which of the following statements is true?
A.The Bank of Canada usually avoids inflation altogether by using contractionary policy.
B.Some inflation is generally associated with a growing economy.
C.Some disinflation is generally associated with a stable economy.
D.Inflation is always bad for an economy.
Which of the following statements is true?
A.It’s easier to bring the inflation rate down from 0% to -1% than from 2% to 1%.
B.Hyperinflation occurs when inflation is greater than 5%.
C.Contractionary monetary policy will cause deflation.
D.A positive inflation target allows room for expansionary policy.
Explanation / Answer
B.Some inflation is generally associated with a growing economy.
Reason
Some growing economies tend to inflate their currency in order to devaluate the currency to facilitate a higher level of export. One example will be India.
2> D.A positive inflation target allows room for expansionary policy.
Reason
Expansionary policy comes up with printing more money to invest more, thus it may create inflation.