Opponents of inflation targets say that
A)such targets encourage workers to plan on a low and stable inflation rate and hold down demands for wage increases
B)the Fed will pay less attention to jobs and economic growth
C)such targets encourage firms to plan on a low and stable inflation rate and hold down price increases
D)such targets encourage investors to plan on a low and stable inflation rate and hold down demands for interest rate increases
E)None of the answers is correct

Question

Quizplus · Accepted Answer

Opponents of inflation targets argue that by focusing solely on inflation, central banks may neglect other important goals such as job creation and economic growth. By setting a specific inflation target, the central bank may be less willing to engage in expansionary monetary policies (such as lowering interest rates) during periods of economic downturn, which could lead to slower job growth and economic recovery.

Opponents of Inflation Targets Say That