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:

PET Scans

A medical imaging technique that produces detailed, three-dimensional pictures of the inside of the body using a radioactive tracer to visualize metabolic or other biological processes.

CT Scans

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Magnetic Resonance Imaging, a medical imaging technique used to visualize internal structures of the body in detail.

Neuron

A specific type of cell that sends nerve signals; known as a neuron.