Inflation targeting requires that the central bank
A) use a short-term interest rate as its policy instrument.
B) adopt a k-percent rule for the inflation rate.
C) avoid changing the amount of the monetary base.
D) publicize its targeted inflation rate.
E) set a fixed price for gold and other real assets.

Question

Quizplus · Accepted Answer

Inflation targeting involves the central bank announcing a specific inflation rate as its goal, which requires publicizing the targeted inflation rate to guide expectations.

Inflation Targeting Requires That the Central Bank