The advantage of a nominal anchor is that it prevents a limitless rise in the
A)national debt.
B)nominal interest rate.
C)inflation rate.
D)unemployment rate.

Question

Quizplus · Accepted Answer

A nominal anchor refers to a policy tool used by central banks to anchor inflation expectations and prevent a limitless rise in the inflation rate. Therefore, the correct choice is C, which represents the inflation rate. Nominal anchors, such as inflation targeting or a fixed exchange rate, help to keep inflation in check, which ultimately promotes macroeconomic stability and fosters sustained economic growth.

The Advantage of a Nominal Anchor Is That It Prevents