Which of these policy targets does NOT provide a "nominal anchor?"
A)high-powered money
B)the unemployment rate
C)the money supply
D)the inflation rate

Question

Quizplus · Accepted Answer

Nominal anchor refers to a variable that serves as a reference point for formulating and implementing monetary policy. It helps anchor public expectations of inflation and guides the central bank's decision-making process. Among the options listed, high-powered money, the money supply, and inflation rate are all commonly used nominal anchors in monetary policy. However, the unemployment rate is not a nominal anchor because it is not directly related to inflation, and controlling it may not necessarily help stabilize inflation.

Which of These Policy Targets Does NOT Provide a "Nominal