Which of the Following Is a Disadvantage of Inflation Targeting

question 22

Multiple Choice

Which of the following is a disadvantage of inflation targeting?

• A) There is simplicity and clarity of the target.
• B) Inflation targeting does not rely on a stable money-inflation relationship.
• C) There is a delayed signal on the achievement of the target.
• D) Inflation targeting reduces the effects of inflation shocks.

---

Definitions:

Budget

An estimate of income and expenditure for a set period of time, often used by governments to plan economic policies.

Federal Government

The system of government in which power is divided between a central authority and constituent political units (such as states or provinces), with the United States government being a prime example.

Cabinet Departments

Major administrative units within the executive branch of the U.S. government, each headed by a Secretary, responsible for a specific area of government policy.

Public Bureaucracy

The body of government officials and administrators, often career civil servants, responsible for implementing policies and administering public programs.