An article in the Wall Street Journal discussed the views of
then Canadian Minister of Finance Joe Oliver on the effect
of falling oil prices on the Canadian economy. According
to the article, Oliver argued that “lower oil prices would
have a broadly neutral impact on real … gross domestic product, but have a negative effect on nominal GDP.”
Given this view, can we tell what effect Oliver must have
expected lower oil prices to have on the inflation rate?
Briefly explain.
Source: Scott Haggett, “Canada Pushes Back Budget to April Due to
Market Instability,” New York Times, January 15, 2015.