Inflation targeting is a framework for carrying out monetary policy whereby
A)the central bank adopts a rigid target for inflation and ignores declines in output.
B)the central bank commits to achieving a publicly announced level of inflation.
C)the central bank commits to achieving a target level of inflation that is never announced publicly.
D)the central bank commits to a monetary growth rule.
E)the central bank commits to achieving a level of inflation equal to the rate of real GDP growth.

Question

Quizplus · Accepted Answer

Inflation targeting involves the central bank committing to achieving a publicly announced level of inflation. This framework is used to guide monetary policy decisions in order to achieve the desired inflation rate. Other options, such as ignoring declines in output or committing to a monetary growth rule, are not characteristics of inflation targeting.

Inflation Targeting Is a Framework for Carrying Out Monetary Policy