Critics of inflation targeting argue that _____.
A)it can lead to lower aggregate supply in the long run
B)forecasting future inflation may be inaccurate, leading to inefficiency
C)governments are too flexible with inflation target rates and need to be more tight
D)targeting inflation may cause net exports to fall in the long run
E)the government can run into a deficit as a result of targeting inflation

Question

Quizplus · Accepted Answer

Critics argue that inflation targeting relies heavily on accurate forecasting of future inflation rates, which can be difficult to do. When forecasts are inaccurate, it can lead to policy responses that are either too strong or too weak, resulting in inefficiency.

Critics of Inflation Targeting Argue That _____