In Practice, Inflation Targeting Is Better Considered as Operating with Constrained

question 82

Multiple Choice

In practice, inflation targeting is better considered as operating with constrained discretion rather than according to a policy rule because central banks with inflation targets typically:

• A) are not allowed to adjust the target in the event of shocks.
• B) set the inflation target as a range rather than as a particular number.
• C) are not held accountable for achieving their target.
• D) must achieve their target regardless of economic conditions.

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Definitions:

Historic Buildings

Structures that hold historical significance due to their architecture, association with important events, or cultural impact.

External Costs

Costs of economic activities that are not reflected in the market price, affecting parties who did not choose to incur that cost.

Supply Curve

A graphical representation of the relationship between the price of a good or service and the quantity supplied for a given period.

Aluminum Production

The industrial process of extracting aluminum from its oxide, alumina, typically through the Hall-Héroult process.