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:

Cognitive Dissonance

The psychological unease felt by an individual harboring two or more conflicting beliefs, ideas, or values simultaneously.

Death Penalty

A legal punishment where a person is put to death by the state as a consequence for a crime.

Pro-Death Penalty

Support for capital punishment, which involves executing individuals as a penalty for severe crimes.

Dissonance Theory

A theory suggesting that inconsistency among beliefs or behaviors causes an uncomfortable psychological tension that people are motivated to reduce.