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Assume Canada Is Experiencing an 8 Percent Annual Rate of Inflation

Question 119

Multiple Choice

Assume Canada is experiencing an 8 percent annual rate of inflation and is also incurring a trade deficit.All else equal, the use of appropriate monetary policy to reduce inflation would:


A) cause the dollar to depreciate in value.
B) have no impact on our trade deficit.
C) decrease our trade deficit.
D) increase our trade deficit.

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