When a central bank is required to provide enough information for markets and the public to understand and evaluate what the monetary authorities are doing,the central bank must have adopted a monetary policy framework known as
A) the cult of personality.
B) time inconsistency.
C) menu pricing.
D) functional finance.
E) inflation targeting.

Question

Quizplus · Accepted Answer

Inflation targeting is a monetary policy framework in which the central bank publicly announces a target level of inflation and uses monetary policy tools to achieve that target. This creates transparency and accountability, as the public can evaluate the central bank's actions in relation to its stated goals.

When a Central Bank Is Required to Provide Enough Information