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:

Linear Trend Extrapolation

A forecasting method that uses historical data to predict future outcomes by fitting the data into a linear equation and projecting it forward.

Trend Extrapolation

The analytical process of using historical data to make predictions or forecasts about future trends.

Semantic Differential Scale

A survey or questionnaire tool that measures the meaning or connotations of a concept by using a series of bipolar adjectives.

Likert Scale

A psychometric scale commonly involved in research that employs questionnaires, often used to measure attitudes or opinions with a degree of agreement or disagreement.