Which of the following is not a disadvantage to inflation targeting?
A)There is a delayed signal about achievement of the target.
B)Inflation targets could impose a rigid rule on policymakers.
C)There is potential for larger output fluctuations.
D)There is a lack of transparency.

Question

Quizplus · Accepted Answer

Lack of transparency is actually a disadvantage of inflation targeting, as it can make it difficult for the public and financial markets to understand the actions and decisions of the central bank. A delayed signal about achievement of the target (A), potential for larger output fluctuations (C), and imposing a rigid rule on policymakers (B) are all valid disadvantages of inflation targeting.

Which of the Following Is Not a Disadvantage to Inflation