_____ Occurs When a Central Bank Sets a Target Inflation

question 193

Multiple Choice

_____ occurs when a central bank sets a target inflation rate and adjusts monetary policy to keep inflation in that range.

• A) Inflation targeting
• B) The Friedman rule
• C) The Taylor rule
• D) A monetary rule

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Definitions:

John Maynard Keynes

A British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments.

Classical Economists

Economists from the 18th and 19th centuries who focused on free markets, the role of competition, and the importance of limiting government intervention in the economy.

Say's Law

A principle stating that supply creates its own demand, meaning that production of goods and services creates an equivalent purchasing power in the economy.

Flexible Wages

A wage system where pay rates can vary based on market conditions, performance, or negotiated agreements, as opposed to fixed salaries.