Nominal GDP targeting is a monetary policy that:
A) tries to achieve a steady chosen percentage increase in nominal GDP each year.
B) tries to keep the level of nominal GDP unchanging as a stabilizing force in the economy.
C) use a fluctuating GDP as a policy tool to achieve the desired level of interest rates.
D) sets a goal level of the money supply and accepts what it does to nominal GDP.

Question

Quizplus · Accepted Answer

Nominal GDP targeting aims to achieve a consistent, predetermined rate of increase in the nominal Gross Domestic Product. This approach focuses on stabilizing the economy by guiding expectations about future economic activity and inflation, rather than keeping nominal GDP constant or using it to manipulate interest rates directly.

Nominal GDP Targeting Is a Monetary Policy That