The immediate objective of a nominal anchor is to reduce the variability of ________.
A)monetary policy targets
B)expected inflation
C)aggregate demand
D)central bank credibility

Question

Quizplus · Accepted Answer

A nominal anchor is a reference point used by central banks to guide expectations about future inflation. Its main goal is to reduce the variability of expected inflation, ensuring that inflation expectations are well-anchored to a specific level or target. This helps to stabilize the economy by providing a predictable environment for firms and households to make economic decisions. Therefore, the correct answer is B, expected inflation.

The Immediate Objective of a Nominal Anchor Is to Reduce