Describe inflation targeting rule as a monetary policy. What are its benefits?
What will be an ideal response?
Inflation targeting requires that the nation's central bank set and then make public an explicit target for the inflation rate. Then the central bank must explain how its policy actions are designed to achieve its inflation goal. Inflation targeting has the major advantage of firmly setting the public's expected inflation rate. It also serves to keep the actual inflation rate because central banks are loathe to set a target level for inflation.
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With respect to labor supply, the substitution effect takes account of the point that at higher wage rates
A) a person can afford to take more leisure. B) leisure has become less expensive and so a person consumes less leisure. C) there are no factors inducing a person to work less. D) leisure has become more expensive and so a person consumes less leisure.
For a monopolist that does not price discriminate, economic profit is maximized in the short run at a price of $140 . Marginal revenue at that output level is
a. equal to $140 b. greater than $140 c. less than $140 d. less than marginal cost e. greater than average revenue
The balance of payments ____________
a. is always zero b. is always one c. is positive when the nation has a trade surplus d. is negative when the nation has a trade deficit e. is positive when the nation has a trade deficit
A nation's monetary base changes when:
a. The central bank reduces the reserve requirement. b. The federal government increases spending. c. Central banks swap currencies with each other. d. Funds cross our imaginary line. e. All of the above.