Inflation Targeting Is a Framework for Carrying Out Monetary Policy

question 32

Multiple Choice

Inflation targeting is a framework for carrying out monetary policy whereby

• A)the central bank adopts a rigid target for inflation and ignores declines in output.
• B)the central bank commits to achieving a publicly announced level of inflation.
• C)the central bank commits to achieving a target level of inflation that is never announced publicly.
• D)the central bank commits to a monetary growth rule.
• E)the central bank commits to achieving a level of inflation equal to the rate of real GDP growth.

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Definitions:

Network Externalities

Effects on a user of a product or service that depend on the number of other users of the same or compatible products or services.

Smartphone Market

The sector of the economy that deals with the production, sale, and distribution of smartphones and related services.

Societal Loss

The total loss in welfare or efficiency that a society faces, often due to inefficiencies or externalities in markets.

Constant Marginal

indicates a condition where the marginal increase or decrease of a variable remains constant with each additional unit, often referred to in the context of production or utility.