Which of the following is true of a central bank that employs inflation targeting? A target rate of employment is maintained by expanding or contracting the money supply. A target rate of annual inflation is maintained by hiring or firing federal employees. A target rate of annual inflation is maintained by increasing or decreasing tax revenues. A target rate of annual inflation is maintained by expanding or contracting the money supply.

Which of the following is true of a central bank that employs inflation targeting? A target rate of employment is maintained by expanding or contracting the money supply. A target rate of annual inflation is maintained by hiring or firing federal employees. A target rate of annual inflation is maintained by increasing or decreasing tax revenues. A target rate of annual inflation is maintained by expanding or contracting the money supply.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter7: Inflation

Section: Chapter Questions

Problem 14SQ

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Concept explainers

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.

Question

Which of the following is true of a central bank that employs inflation targeting?

A target rate of employment is maintained by expanding or contracting the money supply.

A target rate of annual inflation is maintained by hiring or firing federal employees.

A target rate of annual inflation is maintained by increasing or decreasing tax revenues.

A target rate of annual inflation is maintained by expanding or contracting the money supply.

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