All of the following arguments are made against inflation targeting EXCEPT
A) rigid numerical targets would diminish the flexibility of monetary policy.
B) the Fed would need to depend on future forecasts of inflation since monetary policy acts with a lag.
C) the Fed has little influence on inflation.
D) Holding the Fed accountable for low inflation may make it difficult for elected officials to monitor whether the Fed is supporting good overall economic policy.
C
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The deviation of unemployment from its natural rate is called cyclical unemployment
a. True b. False Indicate whether the statement is true or false
Scarce good
What will be an ideal response?
If both borrowers and lenders anticipate the rate of inflation correctly, then
A. borrowers will lose real income. B. lenders will lose real income. C. both borrowers and lenders will lose real income. D. neither borrowers nor lenders will lose real income.
Based on the classical view,
A. All goods produced are always purchased at an unchanging price. B. Unemployment never occurs. C. Cyclical unemployment might occur temporarily. D. Persistent unemployment might be a problem.