In 2012, the Fed
A) adopted a strict monetary rule of 2 percent per year.
B) adopted inﬂation targeting, setting a target rate of 2 percent per year.
C) relaxed all monetary rules and targets in favor of a fully ﬂexible monetary policy.
D) adopted a nominal GDP growth rate target of 6 percent per year.

Question

Quizplus · Accepted Answer

In 2012, the Fed adopted inflation targeting, setting a target rate of 2 percent per year. This means that the Fed aims to keep annual inflation at 2 percent by adjusting monetary policy as needed. This approach is intended to provide transparency and stability in the Fed's actions, and help anchor inflation expectations.