The inflation target of the RBA is:
A) 2-3 per cent at all times.
B) 2-3 per cent over the course of the business cycle.
C) zero per cent at all times.
D) zero per cent over the course of the business cycle.

Question

Quizplus · Accepted Answer

The RBA's inflation target is to keep inflation between 2-3 per cent over the course of the business cycle. This means they allow inflation to temporarily exceed this target during economic expansions but aim to keep it within the range over the longer term. Option A and Option C are incorrect because they suggest a fixed inflation target at all times, which is not the case. Option D is incorrect because a zero per cent inflation target is not feasible or desirable as it would lead to deflation and negative economic consequences.

The Inflation Target of the RBA Is