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The Bank of Canada is following a rule that takes both inflation and business cycles into account when setting the overnight rate. Also suppose that

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The Bank of Canada is following a rule that takes both inflation and business cycles into account when setting the overnight rate. Also suppose that the inflation rate in the economy is 3% and the unemployment rate is 2% below the natural rate. The economy has : Select one: O a. an inflationary gap since actual real GDP exceeds potential real GDP. O b. an inflationary gap since the inflation rate is high. O c. a recessionary gap since the economy is not producing potential GDP. O d. a recessionary gap since potential real GDP exceeds actual real GDP

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