The Method Used by the ECB to Measure Inflation for Meeting

question 66

Multiple Choice

The method used by the ECB to measure inflation for meeting its objectives:

• A) gives equal weight to each member country.
• B) gives greater relative weight to smaller countries.
• C) can result in a contractionary monetary policy being used in a country where inflation is already very low.
• D) is based on wholesale rather than retail prices.

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Definitions:

Economic Growth

A rise in the economic power to produce goods and services when comparing distinct periods.

Capital Formation

The process of accumulating assets and investments that are used for future production or economic growth.

World Bank

An international monetary organization granting loans and finances to governments of less affluent countries for capital project undertakings.

Developing Nations

Countries with lower levels of industrialization, lower standards of living, and lower Human Development Index (HDI) scores compared to more developed countries.