An inflation-targeting monetary policy strategy is when

Question

Quizplus · Accepted Answer

In an inflation-targeting monetary policy strategy, the central bank sets an explicit target for the inflation rate and adjusts its policies to achieve that target. This approach has become popular among many central banks around the world in recent decades. Option A is incorrect because controlling the money supply is not necessarily the goal of an inflation targeting policy, and could be a means to achieve the inflation target. Option B is incorrect because targeting government debt is not related to the goal of stabilizing prices or inflation. Option C is incorrect because committing to reduce unemployment below the natural rate could lead to higher inflation, which is not consistent with an inflation targeting policy.

An Inflation-Targeting Monetary Policy Strategy Is When