Which of the Following Statements About Inflation Targeting Is True

question 218

Multiple Choice

Which of the following statements about inflation targeting is true?

• A)Inflation targeting by the central banks in other countries has not typically lowered inflation.
• B)Inflation targeting would not reduce the flexibility of monetary policy to address other policy goals.
• C)Inflation targeting would not allow the central bank the flexibility to take action against a severe recession.
• D)Inflation targeting would make it easier for households and firms to form accurate expectations of future inflation, improving their planning and the efficiency of the economy.
• E)Inflation targeting allows the central bank to devote all of its resources to ensuring unemployment is at its natural rate.

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Definitions:

Regression

In statistics, a method for modeling the relationships between one or more independent variables and a dependent variable; in psychology, a defense mechanism leading to the temporary or long-term reversion of the ego to an earlier developmental stage rather than handling unacceptable impulses in a more adult way.

Reduction

The process of simplifying or breaking down complex entities into simpler components, often used in scientific and mathematical problem-solving.

Nostalgia

A sentimental longing or wistful affection for the past, typically for a period or place with happy personal associations.

Melancholia

A severe form of depression characterized by persistent feelings of deep sadness, hopelessness, and lack of interest or pleasure in activities.