The Bank of Canada's Response to Changes in Inflation Is

Multiple Choice

The Bank of Canada's response to changes in inflation is more complex than identified in the ADI-IA model because

A) the monetary policy rule can change over time.
B) we cannot calculate the monetary policy rule.
C) the self-correcting mechanism is only effective for recessionary gaps.
D) the self-correcting mechanism is only effective for expansionary gaps.
E) the Bank of Canada responds to expected future inflation as well as current inflation.