When a Central Bank Engages in Inflation Targeting, Then

question 50

Multiple Choice

When a central bank engages in inflation targeting, then

• A)interest rate stability will automatically result
• B)interest rates need to be raised as soon as the output gap starts to shrink
• C)the Taylor rule can still be used as a guide as long as the output coefficient is set to zero
• D)the Taylor rule can still be used as a guide as long as the output coefficient has a lot of weight
• E)none of the above

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Definitions:

Journal

A daily record of financial transactions, providing a detailed account of all entries for each transaction.

Chart of Accounts

An organized list of all ledger account titles and numbers used by a company, serving as a framework for the recording of financial transactions.

Asset Accounts

Accounts that track the value of the resources owned by a business, which can include cash, inventory, equipment, and real estate.