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    The Advantages of the Inflation Theory

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    What are the advantages of inflation targeting?

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    What are the advantages of inflation targeting?

    What are the advantages of inflation targeting? The goals of monetary policy at the Federal Reserve is to assist in achieving maximum employment, stable prices and moderate long term interest rates. A way to achieve the goal of price stability is to utilize an inflation target. The Federal Reserve will set and announce a medium term targets for inflation along with a commitment to achieve the targets. Also, the Federal Reserve will communicate their monetary plans and objectives to the markets and the public. Further, the Federal Reserve will have accountability to achieve the inflation objectives. The monetary policy decisions ...

    Solution Summary

    A central bank can utilize the inflation theory to assist in stabilizing prices through the control of inflation. The advantages of the inflation theory are explained within the assignment.

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