Which Statement About Inflation Targeting Is TRUE

question 23

Multiple Choice

Which statement about inflation targeting is TRUE?

• A) Inflation targeting calls for the Federal Reserve to set the growth rate of the money supply equal to the long-term growth rate of the economy.
• B) Advocates of inflation targeting believe the economy is inherently stable.
• C) If the Fed pursues an inflation target, it increases the money supply when the actual inflation rate is below the target inflation rate.
• D) If the Fed pursues an inflation target, it does not change the money supply unless the actual or forecast inflation rate is above the target inflation rate.