All of the Following Arguments Are Made Against Inflation Targeting

question 87

Multiple Choice

All of the following arguments are made against inflation targeting EXCEPT

• A)rigid numerical targets would diminish the flexibility of monetary policy.
• B)the Fed would need to depend on future forecasts of inflation since monetary policy acts with a lag.
• C)the Fed has little influence on inflation.
• D)Holding the Fed accountable for low inflation may make it difficult for elected officials to monitor whether the Fed is supporting good overall economic policy.

Understand the economic rationale behind the shapes of indifference curves for different types of goods (perfect substitutes, perfect complements, inferior goods, normal goods, Giffen goods).

Differentiate between a budget constraint and an indifference curve in terms of what each represents.

Grasp the concept of optimal consumer choice and how it is determined on a graph.

Recognize the relationship between goods' characteristics (inferior, normal, substitutes, complements) and consumer choice behavior under income changes.

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Definitions:

Career Consolidation

A stage that is entered between the ages of 20 and 40, when young adults become centered on their careers.

George Vaillant

A psychiatrist known for his research on aging and adult development, particularly for his work on the Grant Study, a longitudinal study of men's lives.

Realistic Period

The third stage of Ginzberg’s theory, which occurs in early adulthood, when people begin to explore specific career options, then narrow their choices and make a commitment.

Fantasy Period

According to Ginzberg, the period, lasting until about age 11, when career choices are made, and discarded, without regard to skills, abilities, or available job opportunities.