Potential Advantages of Nominal GDP Targeting Include

question 17

Multiple Choice

Potential advantages of nominal GDP targeting include

• A)it implies that the central bank will respond to slowdowns in the real economy even if inflation is not falling.
• B)real GDP growth that is below potential or inflation that is below the inflation objective will encourage more expansionary monetary policy.
• C)it focuses not only on controlling inflation but also explicitly on stabilizing real GDP.
• D)all of the above.

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Definitions:

Effective Control

The practical authority to direct and manage operations, assets, or investments, often regardless of ownership percentages, ensuring the achievement of strategic objectives.

Widely Held Company

A corporation whose ownership is distributed over a large number of people with no single individual or group having a significant proportion.

Stockholders

Owners of shares in a company and thus, hold equity interest, enjoying benefits like dividends and voting rights.

Return On Preferred Stock

The dividend paid on preferred stock divided by the price of the preferred stock, representing the earnings returned on investments in preferred shares.