Which of the Following Benefits Flow from the Application of an Inflation-Control

question 76

Multiple Choice

Which of the following benefits flow from the application of an inflation-control target?

• A)If actual inflation exceeds the target range, the Bank of Canada can induce a recession to correct the matter.
• B)The monetary authorities can change the target range whenever they feel it is appropriate.
• C)People can make decisions with an understanding that inflation rates will remain relatively low.
• D)Financial market traders have a clearer understanding of the Bank of Canada's intentions.
• E)Both C and D

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Definitions:

Transitivity

Transitivity in decision-making implies that if a person prefers option A over B, and B over C, then the person should also prefer A over C, forming a consistent order of preferences.

Completeness

In decision theory, the idea that every set of choices can be ranked in an order of preference, allowing for a consistent choice under different scenarios.

Indifference Curve

A graph representing combinations of goods among which a consumer is indifferent, reflecting their preferences and utility.

Utility

In economics, the satisfaction or benefit derived by consuming a product or service; a measure of preferences over some set of goods and services.