In order to use inflation targeting, a central bank must:
A)be independent of fiscal policy.
B)be dependent on fiscal policy.
C)focus on money supply.
D)focus on unemployment.
E)focus on stable exchange rates.

Question

Quizplus · Accepted Answer

Inflation targeting requires a central bank to be independent of fiscal policy to ensure that it can make monetary policy decisions without political interference. This independence allows the central bank to focus solely on achieving the inflation target without being influenced by fiscal policies.

In Order to Use Inflation Targeting, a Central Bank Must