Question

When hig inflation is a concern, a central bank’s inflation target is often less credible if:

Answer 1

Answer:

E. None of these make an inflation target less credible

Explanation:

Inflation target as the name implies is the monetary policy whereby the central bank of a particular country sets a specific inflation rate as its goal with the aim to create the impression that prices of goods and services will continue to increase. This will propel the economy to grow by making the citizens to buy things now before they cost more in the future.

Since the inflation target is set by central bank, it is usually credible and hardly have any reason that would create the impression ofbeing less credible.