What Is Inflation Targeting

question 35

Multiple Choice

What is inflation targeting?

• A)Making sure inflation is reduced to zero.
• B)Increasing the required reserve ratio when there is inflation.
• C)Increasing the supply of money in the economy.
• D)Aiming for a particular inflation level.

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Definitions:

Price Elasticity

The degree to which the demand for a good is responsive to changes in its price.

Tax Passed

Occurs when the burden of a tax is shifted from the entity legally responsible for it to another party, such as consumers.

Import Quota

A regulatory measure that sets a physical limit on the quantity of goods that can be imported into a country over a specified period of time.

Tariff

A tax imposed by a government on goods and services imported from other countries, used to control trade.