Which of These Is an Advantage of Inflation Rate Targeting

question 18

Multiple Choice

Which of these is an advantage of inflation rate targeting?

• A)Inflation rates are easy to measure and forecast.
• B)There is almost no lag in inflation rate data.
• C)It allows the Federal Reserve an optimal amount of flexibility in conducting monetary policy.
• D)It reduces inflationary expectations.

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Definitions:

Unused Capacity

Unused capacity represents the available but unutilized production or service capability of a company, which if used, could potentially increase output without increasing fixed costs.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in a net profit or loss.

Machine-Hours

An indicator of how much is produced or the level of activity in manufacturing, determined by the total hours that machinery is in use during the production process.

Job-Order Costing

A costing method used to calculate the production costs of individual units or batches of products, making it especially useful for customized orders in manufacturing or service industries.