In its most recent attempt in lowering the inflation rate, the Bank of Canada announces explicit targets for the rate of change in "core CPI," because ________.
A) core CPI excludes volatile components, such as food, energy, and the effect of indirect taxes
B) core inflation is useful in assessing whether trend inflation is on track for the medium term
C) A and B only.
D) None of the above.

Question

Quizplus · Accepted Answer

Core CPI excludes volatile components, such as food, energy, and the effect of indirect taxes, making it a more stable measurement of inflation. Additionally, core inflation is useful in assessing whether trend inflation is on track for the medium term, allowing for more accurate inflation targeting by the Bank of Canada. Therefore, both A and B are correct.

In Its Most Recent Attempt in Lowering the Inflation Rate