Question: 16. Study Reading Between the Lines on pp. 750751 and then answer the following questions. a. Given the policy action taken by the Bank of

16. Study Reading Between the Lines on pp. 750–751 and then answer the following questions.

a. Given the policy action taken by the Bank of Canada, how do you think the Bank’s expectation about future real GDP growth and future inflation differ from the most recent actual real GDP growth rate and inflation rate?

b. What would be the normal response to a large cut in the overnight rate in the market for loanable funds and to aggregate demand?

c. What made 2008 unusual and how would you analyze the special features of 2008 in the market for loanable funds?

d. If the Bank of Canada had not cut the overnight rate, what might the consequences have been?

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