Which of the Following Statements About Inflation Targeting Is Correct

Multiple Choice

Which of the following statements about inflation targeting is correct? Inflation targeting

A) is irrelevant to the stability of the economy because of the long-run neutrality of money.
B) is a destabilizing policy because it requires the Bank of Canada to engage in inappropriate policy responses.
C) is a stabilizing policy because the Bank of Canada's policy adjustments act to stabilize real GDP growth.
D) should be replaced with fiscal policy targeting because of the long-run neutrality of money.
E) creates output gaps that must be then offset with fiscal policy stabilizers.