_____ occurs when a central bank sets a target inflation rate and adjusts monetary policy to keep inflation within that range.
A) Inflation targeting
B) The Friedman rule
C) The Taylor rule
D) A monetary rule

Question

Quizplus · Accepted Answer

Inflation targeting is a monetary policy strategy where a central bank sets a target inflation rate and adjusts monetary policy, such as interest rates, to keep inflation within a certain range. This approach is used by many central banks around the world. The Taylor rule is a related concept, but it is a specific formula that suggests a certain level of interest rates based on inflation and output data, rather than a broader strategy like inflation targeting. The Friedman rule is a theoretical concept that suggests setting interest rates at zero, but it is not a common approach in practice. A monetary rule is a more general concept that refers to any systematic approach to setting monetary policy.

_____ Occurs When a Central Bank Sets a Target Inflation