The Bank of Canada and the government of Canada have agreed that the Bank will a

Question

The Bank of Canada and the government of Canada have agreed that the Bank will achieve an inflation rate target

Choose the statement that is incorrect.

A.inflation targeting leads to accurate inflation expectations,which lead to better economic decisions,helping to achieve more efficient allocations of labour,promoting full employment in the long run,

B.The Bank of Canada use the core CPI as the measure of inflation for the inflation-control target

C.The firmly held and correct inflation expectations that arise from inflation targeting promote more stable economic growth

D.Inflation targeting leads to expectations of low inflation,which makes the short-run ourput-inflation-tradeoff as favourable as possible

Explanation / Answer

The incorrect statement is option (A). The BAnk of Canada gives inflation expectations on a short term. The goals are created to propmote employment to target CPI inflation which is designed for a short term. This is on continous basis and creates a successful revenue on a long term basis.

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