All of the Following Arguments Are Made Against Inflation Targeting

question 99

Multiple Choice

All of the following arguments are made against inflation targeting EXCEPT

• A) rigid numerical targets would diminish the flexibility of monetary policy.
• B) the Fed would need to depend on future forecasts of inflation since monetary policy acts with a lag.
• C) the Fed has little influence on inflation.
• D) holding the Fed accountable for low inflation may make it difficult for elected officials to monitor whether the Fed is supporting good overall economic policy.

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Definitions:

Spinal Cord

The major bundle of nerves running down the back, transmitting signals between the brain and the rest of the body.

Sympathetic Nervous System

A part of the autonomic nervous system that prepares the body for action by accelerating the heart rate, increasing blood pressure, and dilating airways.

Neural Networks

Systems of interconnected neurons, either biological or artificial, that process and transmit information through electrical and chemical signals.

Central Nervous System

The part of the nervous system that includes the brain and spinal cord, responsible for integrating sensory information and responding accordingly.