Inflation Targeting

question 110

Multiple Choice

Inflation targeting:

• A) explicitly considers the long-run goal of price stability for monetary policy.
• B) states that the long-run goal of monetary policy is an output target.
• C) explicitly considers the short-run goal of price stability for monetary policy.
• D) puts equal weight on price stability and an output target for monetary policy.

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Definitions:

Money Supply

The sum of all available money in an economy at a given moment, encompassing cash, coins, and bank account balances.

Real GDP

The measure of the value of economic output adjusted for price changes (inflation or deflation), reflecting the real volume of production.

Price Level

The overall price mean for each and every product and service in the economic sector.

Aggregate Supply Curve

A graphical representation showing the relationship between the overall price level in an economy and the total output produced by firms at that price level.