Which of the following is a disadvantage of inflation targeting?
A) There is transparency.
B) Inflation targeting does not rely on a stable money-inflation relationship.
C) It imposes a rigid rule.
D) Inflation targeting reduces the effects of inflation shocks.

Question

Quizplus · Accepted Answer

Inflation targeting imposes a rigid rule, which can limit the flexibility of policymakers to respond to economic fluctuations and unexpected events. This can result in suboptimal outcomes for the economy.

Which of the Following Is a Disadvantage of Inflation Targeting