Potential Weaknesses of Nominal GDP Targeting Include

Multiple Choice

Potential weaknesses of nominal GDP targeting include

A) it requires accurate estimates of potential GDP growth,which are not easy to achieve.
B) real GDP growth that is below potential or inflation that is below the inflation objective will encourage more expansionary monetary policy.
C) it is more complicated to explain to the public than inflation targeting and thus the public might be confused about the objectives of the central bank.
D) both A and C.