Which of the Following Is NOT a Difference Between the Bank

Multiple Choice

Which of the following is NOT a difference between the Bank of Canada's explanation of how monetary policy works and the Keynesian cross explanation?

A) The Keynesian cross explanation assumes that interest rate actions of the Bank have no effect on the exchange rate or on net exports.
B) The Keynesian cross explanation does not make it explicit that there are time lags between changes in the interest rate by the Bank and their ultimate effects on the economy.
C) The Keynesian cross explanation assumes that prices are fixed.
D) The Keynesian cross explanation assumes that the inflation rate is zero.
E) The Keynesian cross explanation does not allow interest rates to affect consumption or investment.