The Bank of Canada Has Formally Adopted an Inflation Target

Multiple Choice

The Bank of Canada has formally adopted an inflation target of 2%.One important reason for this is

A) the supply-shock inflation will never exceed this amount.
B) to avoid the temptation of validating positive economic shocks that could lead to accelerating inflation.
C) that output-gap inflation will never exceed this amount.
D) to allow for a permanent inflationary gap which is beneficial to the economy.
E) that economists have determined that only an inflation rate of 2% is consistent with NAIRU.