Potential Weaknesses of Nominal GDP Targeting Include

question 26

Multiple Choice

Potential weaknesses of nominal GDP targeting include

• A)it is more complicated to explain to the public than inflation targeting and thus the public might be confused about the objectives of the central bank.
• B)it implies that the central bank will respond to slowdowns in the real economy even if inflation is not falling.
• C)real GDP growth that is below potential or inflation that is below the inflation objective will encourage more expansionary monetary policy.
• D)it focuses not only on controlling inflation but also explicitly on stabilizing real GDP.

---

Definitions:

Joints

Structures that connect two or more bones in the body, facilitating movement and providing support.

Origin

Refers to the point or place where something begins, arises, or is derived.

Smooth Layers

In certain contexts, it refers to layers that have a uniform and even surface, often found in geological or material science studies.

Contracting

The process of entering into a formal agreement to provide services or execute specified tasks.