Which of the Following Is Not a Disadvantage of Inflation

question 8

Multiple Choice

Which of the following is not a disadvantage of inflation targeting?

• A) If the U.S. inflation rate deviates substantially from the Fed's target inflation rate, the Fed could lose credibility.
• B) The Fed's focus on inflation could result in a much higher unemployment level.
• C) The Fed's focus on inflation could result in much higher interest rates, which would discourage economic growth.
• D) All of the above are disadvantages of inflation targeting.

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Definitions:

Conjunction Fallacy

A logical fallacy where people incorrectly judge the probability of the conjunction of two events to be more likely than the probability of a single one of those events.

Subcategory

A more specific grouping within a larger category, often distinguished by particular characteristics.

Semantic Slanting

The deliberate choice of words to create specific emotional responses or to subtly influence perception.

Emotional Impact

The profound effect or influence that an experience, event, or communication has on a person's emotions or feelings.