How is inflation targeting consistent with the "dual mandate" of price stability and maximum employment?
What will be an ideal response?
Inflation targeting is based on targets defined over a long-enough time period so that policy can respond flexibly to avoid high unemployment. Credible commitment to an inflation target, also, supports policy flexibility, so that expansionary policies may be pursued as needed, without causing an increase in expected inflation. Nothing is more crucial to maintaining low unemployment than effective management of expected inflation.
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A net borrower is a country that ________, while a net lender is a country that ________
A) borrows more than it lends; owes more to foreigners than foreigners owe to it B) decreases its stock of outstanding foreign debt; lends more than it borrows C) borrows more than it lends; lends more than it borrows D) lends more than it borrows; borrows more than it lends
Explain how
(i) a risk-averse individual, (ii) a risk-neutral individual, and (iii) a risk-preferring individual would respond to the opportunity of placing a bet at fair odds.