Critics of the Federal Reserve have accused the Fed of using the 2% inflation target as a ceiling. What does this mean?
A)The Fed ensures inflation does not rise above 2% instead of allowing inflation to fluctuate around 2%.
B)The Fed ensures unemployment is unable to fall below 2%.
C)The Fed ensures the real interest rate does not rise above 2% instead of allowing the real interest rate to fluctuate around 2%.
D)The Fed ensures inflation does not fall below 2% instead of allowing inflation to fluctuate around 2%.

Question

Quizplus · Accepted Answer

Critics of the Federal Reserve argue that rather than allowing inflation to fluctuate around the target of 2%, the Fed limits inflation to not rise above that level. This means that the Fed is not allowing for more expansionary monetary policy that could potentially result in higher inflation in order to achieve greater economic growth and job creation.

Critics of the Federal Reserve Have Accused the Fed of Using