Which of the following is true with respect to inflation targeting?
A)Inflation targeting would allow the Fed more control over inflation caused by excessive aggregate demand.
B)Inflation targeting would require the Fed to maintain very strong economic growth.
C)Inflation targeting could control the inflation caused by higher oil prices.
D)Inflation targeting would allow the Fed to have more control over the unemployment rate.

Question

Quizplus · Accepted Answer

Inflation targeting allows central banks, like the Federal Reserve (Fed), to focus on controlling inflation that arises from excessive aggregate demand by adjusting interest rates. This approach does not directly control inflation from supply-side factors like oil prices, nor does it primarily aim to maintain strong economic growth or directly control the unemployment rate.

Which of the Following Is True with Respect to Inflation