If the Rate of Inflation Is Expected to Fall Below

Multiple Choice

If the rate of inflation is expected to fall below the target range of 1 to 3 percent, the Bank of Canada will

A) increase the target for the overnight interest rate.
B) decrease the exchange rate for the Canadian dollar.
C) increase their demand for Canadian dollars.
D) decrease the target for the overnight interest rate.
E) engage in sale and repurchase agreements with commercial banks.