Currently, if inflation is 2 percent and the goods inflation target is 2.5 percent, policymakers:
A)congratulate themselves for coming in under their target.
B)are unhappy because they have come in under their target.
C)are indifferent because they don't have an inflation target.
D)are indifferent because they are more interested in asset inflation.

Question

Quizplus · Accepted Answer

Policymakers would be unhappy because they have come in under their target. If the goods inflation target is 2.5 percent, achieving only 2 percent inflation means they have not reached their goal, indicating that the economy might not be growing as desired or that monetary policy might need adjustment to stimulate higher inflation towards the target.

Currently, If Inflation Is 2 Percent and the Goods Inflation