The Benefit of Adopting an Inflation-Control Target I

question 10

Multiple Choice

The benefit of adopting an inflation-control target i.is that the Reserve Bank's policy actions are clearly understood in financial markets.
Ii) is that it provides an anchor for future expectations of inflation.
Iii) is that Reserve Bank policy actions are hidden from financial markets.

• A)i and ii
• B)iii only
• C)i only
• D)ii only
• E)None of the above answers is correct.

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Definitions:

Arbitration

Settlement of a labor–management dispute by a third party whose solution is legally binding and enforceable.

Labor Contract

The formal, written document that spells out the relationship between the union and management for a specified period of time—usually two or three years.