A Policy of Inflation Targeting Generally Involves Targeting the Future

question 26

Multiple Choice

A policy of inflation targeting generally involves targeting the future rate of inflation because

• A) monetary policy changes made today will take time to have an effect on the economy.
• B) monetary policy involves changing interest rates and interest is paid annually.
• C) economists are only ever interested in the future.
• D) workers and their unions consider future inflation in their negotiations with employers.

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Definitions:

Clarity

The quality of being easily understood, completely transparent, and free from ambiguity.

Assessing Situation

The process of evaluating the details and implications of a scenario or set of circumstances to inform decisions or actions.

Scope

The extent and boundaries of an area or subject matter that something deals with or to which it is relevant.

Implementation

The process of putting a decision or plan into effect, executing or enacting it within a defined timeframe or context.