Central Banks That Practice Flexible Inflation Targeting Are ____ Than

question 36

Multiple Choice

Central banks that practice flexible inflation targeting are ____ than central banks that practice strict inflation targeting.

• A)more likely to adjust policy in response to output gaps
• B)less likely to adjust policy in response to output gaps
• C)more concerned with inside lags in macroeconomic policy
• D)less concerned with inside lags macroeconomic policy

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Definitions:

Risk Neutral

A condition in which an individual or entity shows indifference between choices that have different levels of risk, focusing solely on potential outcomes regardless of uncertainty.

Expected Level

the anticipated quantity or value in a given context, often based on statistical analysis or previous observations.

Risk Aversion

A preference for options that offer more certainty and less potential for loss.

Insurance Policy

A contract between an individual or entity and an insurance company, outlining the terms under which insurance coverage is provided.