Inflation Targeting

Multiple Choice

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.