An Inflation Rate Targeting Rule

question 158

Multiple Choice

An inflation rate targeting rule

• A) reduces uncertainty about monetary policy.
• B) will not work if the Fed continues to sue open market operations.
• C) has been adopted the by the Fed in response to the financial crisis of 2008-2009.
• D) means that the inflation rate must exceed 5 percent in order for the rule to be effective.

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Definitions:

Elastic

Describes a situation where the quantity demanded or supplied of a good changes significantly in response to price changes.

Demand

The willingness and ability of consumers to purchase goods or services at various price levels.

Revenue

The earnings a company garners from its principal operations, often through selling products and services to its clientele.

Supply

The total amount of a particular good or service that is available to consumers at a given price level in a given time period.