Which Statement About Inflation Targeting Is TRUE

Multiple Choice

Which statement about inflation targeting is TRUE?

A) Inflation targeting calls for the Federal Reserve to set the growth rate of the money supply equal to the long-term growth rate of the economy.
B) Advocates of inflation targeting believe the economy is inherently stable.
C) If the Fed pursues an inflation target, it increases the money supply when the actual inflation rate is below the target inflation rate.
D) If the Fed pursues an inflation target, it does not change the money supply unless the actual or forecast inflation rate is above the target inflation rate.