A central feature of monetary policy strategies in all countries is the use of a nominal anchor,which is a nominal variable that monetary policymakers use as an

Question

Quizplus · Accepted Answer

A nominal anchor is an intermediate target used by central banks to achieve ultimate goals, such as price stability or exchange rate stability. The nominal anchor serves as a guide for monetary policy decisions and helps anchor inflation expectations. Examples of nominal anchors include inflation targets, exchange rate targets, and monetary aggregates. Therefore, choice C is the best answer as it correctly identifies the nominal anchor as an intermediate target used to achieve an ultimate goal such as price stability.

A Central Feature of Monetary Policy Strategies in All Countries