the economics of money, banking, and financial markets

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18.4 Inflation Targeting

1. 
   

   The type of monetary policy that is used in Canada, New Zealand, and the United Kingdom is
   ____.
   A) monetary targeting
   B) inflation targeting
   C) targeting with an implicit nominal anchor
   D) interest-rate targeting
   Answer: B
   Diff: 1 Type: MC Page Ref: 443
   Skill: Recall
   Objective List: 18.2 List the advantages and disadvantages of inflation targeting

   
   


2. 
   

   Concerns about a dual mandate include ____.
   A) over expansionary policy
   B) policies that lead to large output fluctuations
   C) time-inconsistency problems
   D) decreases in output and unemployment
   Answer: A
   Diff: 1 Type: MC Page Ref: 443
   Skill: Recall
   Objective List: 18.2 List the advantages and disadvantages of inflation targeting

   
   


3. 
   

   Which of the following is NOT an element of inflation targeting?
   A) A public announcement of medium-term numerical targets for inflation
   B) An institutional commitment to price stability as the primary long-run goal
   C) An information-inclusive approach in which only monetary aggregates are used in making
   decisions about monetary policy
   D) Increased accountability of the central bank for attaining its inflation objectives
   Answer: C
   Diff: 3 Type: MC Page Ref: 443
   Skill: Recall
   Objective List: 18.2 List the advantages and disadvantages of inflation targeting

   
   


4. 
   

   The first country to adopt inflation targeting was ____.
   A) the United Kingdom
   B) Canada
   C) New Zealand
   D) Australia
   Answer: C
   Diff: 1 Type: MC Page Ref: 443
   Skill: Applied
   Objective List: 18.2 List the advantages and disadvantages of inflation targeting