Suppose Output Is at Its Potential Level and Then There

Multiple Choice

Suppose output is at its potential level and then there is a sudden increase in food and energy prices.This increase

A) makes inflation targeting easier because it makes these problems less relevant.
B) makes inflation targeting harder because these are closely related to excess demand in the economy.
C) would be unlikely to lead to an immediate policy response because it would not appear in "core" inflation.
D) would be offset by a decline in the Canadian dollar,making these price increases irrelevant.
E) would lead to an immediate policy response to prevent the opening of an inflationary gap.