Consider the Following Statement About Inflation Targeting: a Policy of Inflation

question 75

Multiple Choice

Consider the following statement about inflation targeting: A policy of inflation targeting acts as an automatic stabilizer in the economy,just like the automatic fiscal stabilizers.Choose the most appropriate response to this statement.The statement is

• A)true,because an inflationary gap is met with a contractionary monetary policy.
• B)true,because a recessionary gap is met with an expansionary monetary policy.
• C)not true,because inflation targeting requires active policy decisions by the Bank of Canada,whereas fiscal stabilizers need no policy implementation.
• D)not true,because inflation targeting automatically maintains inflation within the target range,whereas fiscal stabilizers require government policy decisions.
• E)true,because inflation targeting and fiscal stabilizers are essentially the same policy tool.

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Definitions:

Action Potentials

Brief electrical impulses that represent the foundation of communication within and between neurons.

Synaptic Pruning

A neurodevelopmental process where extra neurons and synaptic connections are eliminated to increase the efficiency of neuronal transmissions.

Neurogenesis

The process by which new neurons are formed in the brain.

Synaptic Reuptake

A process by which neurotransmitters are absorbed back into the neuron after being released into the synaptic gap, influencing the modulation of neural signals.