An argument in favour of using inflation targeting, as the Bank of Canada does, is that in the long run, it can have an impact on inflation but not on real GDP.

Question

Quizplus · Accepted Answer

Inflation targeting can help anchor inflation expectations and ultimately lead to lower inflation rates in the long run. However, it does not directly affect real GDP as it primarily focuses on keeping inflation within a target range. Real GDP is affected by factors such as productivity, investment, and consumer spending, which are influenced by a variety of economic factors beyond just inflation.

An Argument in Favour of Using Inflation Targeting, as the Bank