Formal Adoption of Inflation Targeting Can Lead to a Loss

question 17

Essay

Formal adoption of inflation targeting can lead to a loss of independence for a central bank. Briefly explain why this is not necessarily a problem.

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Definitions:

P-to-O Expectancy

The belief that putting effort into a task will lead to achieving a desirable outcome.

Relative Status

Pertains to the position or ranking of an individual or group in relation to others within a social or organizational context, influencing dynamics and interactions.

Four-drive Theory

A motivational theory suggesting humans are driven by four basic needs: acquire, bond, comprehend, and defend, that influence behavior and decision making.

Hard-Wired

Something that is innately set or programmed in a way that is difficult to change.