Which of the following is not a valid reason for adopting inflation targeting?
A) policy rules are often too restrictive
B) discretionary policy can reduce credibility
C) constrained discretion operates with excessive lags
D) inflation targeting provides flexibility for dealing with shocks
E) inflation targeting examines trends in several variables, whereas policy rules use limited information

Question

Quizplus · Accepted Answer

Inflation targeting does not suffer from excessive lags due to constrained discretion; rather, it allows central banks to respond proactively to economic conditions and shocks, providing a framework for making informed policy decisions that can be adjusted as necessary.

Which of the Following Is Not a Valid Reason for Adopting