Which of the Following Statements About Inflation Targeting Is Correct

question 52

Multiple Choice

Which of the following statements about inflation targeting is correct? Inflation targeting

• A)is irrelevant to the stability of the economy because of the long-run neutrality of money.
• B)is a destabilizing policy because it requires the Bank of Canada to engage in inappropriate policy responses.
• C)is a stabilizing policy because the Bank of Canada's policy adjustments act to stabilize real GDP growth.
• D)should be replaced with fiscal policy targeting because of the long-run neutrality of money.
• E)creates output gaps that must be then offset with fiscal policy stabilizers.