Inflation targeting refers to conducting ________ policy so as to commit the central bank to achieving a ________.
A)fiscal; publicly announced level of inflation
B)fiscal; zero inflation rate
C)monetary; publicly announced level of inflation
D)monetary; zero inflation rate
E)monetary; stable price level

Question

Quizplus · Accepted Answer

Inflation targeting refers to conducting monetary policy so as to commit the central bank to achieving a publicly announced level of inflation. This is done by setting a target for inflation and adjusting the monetary policy tools, such as interest rates, to achieve the target. Inflation targeting generally aims for a low but positive rate of inflation, rather than zero inflation or deflation.

Inflation Targeting Refers to Conducting ________ Policy So as to Commit