Which of the following statements is true? A.The Bank of Canada usually avoids i

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.

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