Opponents of inflation targets argue that _____
A) such targets encourage workers to expect a low and stable inflation rate and hold down demands for wage increases.
B) the Fed pays less attention to economic growth when it sets such targets.
C) such targets encourage firms to plan on a low and stable inflation rate and hold down price increases.
D) such targets encourage investors to plan on a low and stable inflation rate and hold down demands for interest rate increases.
E) the Fed pays more attention to jobs and economic growth when it sets such targets.

Question

Quizplus · Accepted Answer

Opponents of inflation targets argue that focusing on keeping inflation low can lead the Federal Reserve (or any central bank) to pay less attention to other important economic objectives, such as economic growth. This is because maintaining strict inflation targets might require policies that can slow down economic activity.

Opponents of Inflation Targets Argue That _____