When a central bank engages in inflation targeting
A)unemployment isn't affected since nominal interest rates are kept very low
B)interest rates are raised substantially as soon as the output gap increases
C)interest rate stability is an explicit policy goal
D)little weight is give to transparency
E)little or no weight is given to the output gap

Question

Quizplus · Accepted Answer

Inflation targeting focuses primarily on controlling inflation, often giving less emphasis to the output gap, which is the difference between actual and potential economic output.

When a Central Bank Engages in Inflation Targeting