Approaches to establishing central bank credibility include
A)continued success at keeping inflation under control.
B)inflation targeting.
C)exchange rate targeting.
D)all of the above.

Question

Quizplus · Accepted Answer

A central bank can establish credibility by demonstrating continued success in keeping inflation under control. Inflation targeting, or setting a target for inflation and taking necessary measures to meet the target, also helps in establishing credibility. Exchange rate targeting, or maintaining a certain exchange rate, can also contribute to central bank credibility. Therefore, all of the above approaches can be effective in establishing central bank credibility.

Approaches to Establishing Central Bank Credibility Include