Question

All of the following arguments are presented in favor of inflation targeting EXCEPT

(A) it would reduce the lags inherent in monetary policy.
(B) it would provide an anchor for inflationary expectations.
(C) it would draw attention to what the central bank can achieve in practice.
(D) it would promote accountability by providing a yardstick by which policy can be measured.

Answer 1

The correct answer is letter "A": it would reduce the lags inherent in monetary policy.

Step-by-step explanation:

Inflation targeting is a monetary policy in which the central bank sets a specific target for medium-term inflation and declares the target for inflation. The idea is that maintaining price stability is the best that monetary policy can do to support the economy in the long run.