Proponents of Inflation Targeting Generally Think That

question 24

Multiple Choice

Proponents of inflation targeting generally think that

• A) the economy will have fewer, shorter, and less severe business cycles if the Fed holds the rate of inflation to low, targeted levels from year to year.
• B) low interest rates are inflationary and high interest rates are deflationary.
• C) fiscal policy is more effective in stabilizing the economy than monetary policy.
• D) the Fed should strive to achieve zero inflation.

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Definitions:

Belongingness

The human emotional need to be an accepted member of a group, whether it is family, friends, or co-workers.

Esteem Needs

Maslow's hierarchy of needs level, where individuals seek respect, self-esteem, recognition, and success to feel valued and fulfilled.

Deficiency Motive

A motivation that arises from the lack or deficit of some need or desire, driving behavior to fulfill that need.

Hierarchy

Hierarchy refers to a system or organization in which people or groups are ranked one above the other according to status or authority.