Question

Which of the scenarios best reflects the meaning of the term inflation targeting? a) In anticipation of the upcoming election, the chairman of the Federal Reserve lowers interest rates, hoping to win support for the incumbent president. b) A central bank is expected to achieve a 3% annual inflation rate. c) Hoping to reduce inflation to improve public opinion, the Federal Reserve decides to lower interest rates. d) A local shopping mall offers an "inflation discount," which compensates for the recent increase in prices, in the hopes of targeting savvy consumers.

Answer 1

Answer:

b) A central bank is expected to achieve a 3% annual inflation rate

Explanation:

Inflation targeting is a type of monetary policy where the central bank of a country sets an inflation rate as its goal or target.