Which of the following is an advantage of inflation targeting?
A) There is simplicity and clarity of the target.
B) Inflation targeting does not rely on a stable money-inflation relationship.
C) It is understood by the public and is transparent.
D) All of the above.

Question

Quizplus · Accepted Answer

All of the above options are advantages of inflation targeting. The clarity of the target makes it easier for policymakers to communicate with the public and markets, and for the public and markets to understand what the central bank is trying to achieve. Inflation targeting does not require a stable money-inflation relationship, which allows for greater flexibility in response to changing economic conditions. Finally, the transparency of inflation targeting means that the public and markets can hold the central bank accountable for achieving its targets.

Which of the Following Is an Advantage of Inflation Targeting