Unlike a monetarist policy rule, an inflation target has the advantage of:
A) eliminating the need to announce the policy target.
B) providing a real target rather than a nominal one.
C) allowing the central bank unlimited discretion.
D) insulating the economy from changes in money velocity.

Question

Quizplus · Accepted Answer

An inflation target helps stabilize the economy by focusing on price stability, which can mitigate the effects of changes in money velocity, unlike a strict monetarist rule that focuses on controlling money supply.

Unlike a Monetarist Policy Rule, an Inflation Target Has the Advantage