Suppose That the Economy Is Producing Below Potential GDP and the Bank

Multiple Choice

Suppose that the economy is producing below potential GDP and the Bank of Canada implements the correct change in monetary policy, but not until after the economy has passed the trough of the recession.Then

A) the Bank of Canada's contractionary policy will result in too large of a decrease in GDP.
B) the Bank of Canada's contractionary policy will result in too small of a decrease in GDP.
C) the Bank of Canada's expansionary policy will result in too small of a decrease in GDP.
D) the Bank of Canada's expansionary policy will result in too large of an increase in GDP.