Question

1170/4300 Which of the following is true of a central bank that employs inflation targeting? O A target rate of annual inflation is maintained by hiring or firing federal employees. O A target rate of annual inflation is maintained by increasing or decreasing tax revenues. O A target rate of employment is maintained by expanding or contracting the money supply O A target rate of annual inflation is maintained by expanding or contracting the money supply

Answer 1

A target rate of annual inflation is maintained by expanding or contracting the money supply

Step-by-step explanation:

• This is done with the help of various monetary policies issued by the central bank to expand or reduce the money supply in the economy.

• To increase the rate of inflation, money supply should be increased and vice a versa.