Question

What is inflation​ targeting? A. A policy that attempts to reduce inflation to zero. B. Another name for contractionary monetary policy. C. Committing the central bank to achieve an announced level of inflation. D. A target that links the​ Fed's target for the federal funds rate to inflation.

Answer 1

Option (C) is correct.

Step-by-step explanation:

Inflation targeting refers to a term that is used by the central bank of a nation to achieve a certain level of inflation from the current level of inflation. Inflation targeting is a monetary policy in which central bank announces the desired inflation target to the common public. Price stability is consider as the prime objective of the central bank while setting up a monetary policy.