The central banks of practice inflation targeting. Canada, Japan, and the United

Question

The central banks of practice inflation targeting. Canada, Japan, and the United States The United Kingdom, Canada, and Australia The United States, Canada, and the Euro countries The United Kingdom, Canada, Australia, New Zealand, Sweden, the Euro countries, and the United States Inflation-targeting central banks use the as the policy instrument. Inflation targeters. They also explain why. overnight interest rate (the equivalent of the federal funds rate); publish an inflation report that describes the current state of the economy and its expected evolution over the next two years, the central bank's policy will achieve the inflation target quantity of bank reserves; publish an inflation report that explains why a given quantity of reserves will lead to the desired inflation rate; they expect aggregate demand will increase or decrease and the necessity for coordination with fiscal policy quantity of bank reserves; realize that while the goal is to have zero inflation, this goal is an impossibility; the central bank's policy will achieve an inflation rate that is as close to zero as is possible overnight interest rate (the equivalent of the federal funds rate); realize that while the goal is to have zero inflation, this goal is an impossibility; fiscal policy needs to be expansionary in times of high inflation and contractionary in times of low inflation Docs inflation targeting achieve lower inflation rates? Choose the correct statement. Canada and Australia have missed their inflation targets but the other inflation targeters have achieved theirs. None of the inflation targeters have achieved their targets All of the inflation targeters have achieved their targets. Eurozone and New Zealand have missed their inflation targets but the other inflation targeted have achieved theirs.

Explanation / Answer

Ans is D
Many countries including United Kingdom (Bank of England), Canada (Bank of Canada), Czech Republic (Czech National Bank), Australia (Reserve Bank of Australia), South Korea (Bank of Korea), Egypt (Central Bank of Egypt), South Africa (South African Reserve Bank), Iceland (Central Bank of Iceland), Brazil (Brazilian Central Bank), Philippines (Bangko Sentral ng Pilipinas), United States (Federal Reserve),[28] and Japan (Bank of Japan), pratice inflation targeting.

Ans is A
Inflation targeting is a monetary policy in which a central bank has an explicit target inflation rate for the medium term and announces this inflation target to the public. The assumption is that the best that monetary policy can do to support long-term growth of the economy is to maintain price stability. The central bank uses interest rates, its main short-term monetary instrument.

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