Question

For countries that use inflation targeting, the rate of inflation serves as which of the following? a. The main operating target b. The most important intermediate target c. The most important policy instrument d. All of the above

Answer 1

Answer:The most important policy instrument.

Explanation:Inflation targeting is when the central bank of a country sets specific gradual rate for inflation.It does this in such a way that Inflation rate has a specific limit,this will make consumers think this increment will continue.

As prices rises,people buy more with the intention of selling later at an higher price.

If it is done right,it increases demand,lowers unemployment rate as industries increase their production capacity if demand is high.Inflation targeting usually boost economic growth.