Hands-on and hands-off economists agree that targeting inflation anchors inflationary expectations.

Question

Quizplus · Accepted Answer

Both hands-on and hands-off economists believe that targeting inflation helps anchor inflationary expectations. By setting a clear target for inflation, people, firms, and markets can adjust their behavior and expectations accordingly, helping to prevent inflation from spiraling out of control. This is a central tenet of many central banks' monetary policy frameworks, including the Federal Reserve's dual mandate in the United States.

Hands-On and Hands-Off Economists Agree That Targeting Inflation Anchors Inflationary