An argument in favor of the Federal Reserve adopting inflation targeting is that in the long run,the Fed can have an impact on inflation but not on real GDP.

Question

Quizplus · Accepted Answer

The Federal Reserve can influence inflation rates through monetary policy in the long run, but its impact on real GDP is considered temporary, as real GDP is primarily determined by factors such as technology, labor, and capital, which are beyond the direct control of monetary policy.

An Argument in Favor of the Federal Reserve Adopting Inflation