Fill in the blanks to make the following statements correct.

a. The long-run policy target for the Bank of Canada is the _______________.  The current target is  to keep the inflation rate at ____________ present . 

b. In the short run, the Bank of Canada closely monitors the __________.

c. The Bank of Canada conducts its monetary policy by announcing a change in the ________. It then conducts the necessary _________ in order to make this rate an equilibrium in the money market.

d. The conduct of monetary policy is made more difficult because of lags. Two reasons for these time lags are

• __________

• __________

e. Economists have estimated that a change in monetary policy has an effect on real GDP after a period of ___________ months and an effect on the price level after a period of months.

f. Because of the long time lags involved in the execution of monetary policy, it is very possible that the policy may in fact have a(n) __________ effect on the economy.