Question 13 Which of the following is an advantage of inflation targeting? Show answer choices ^ reduction of the time-inconsistency problem increased monetary policy transparency consistency with democratic principles There is an immediate signal on the achievement of the target. Which of the following is an element of inflation targeting? Show answer choices ^ an institutional commitment to price stability as the primary long-run goal increased accountability of the central bank for attaining its inflation objectives a public announcement of medium-term numerical targets for inflation an information-inclusive approach in which only monetary aggregates are used in making decisions about monetary policy Which of the following is an argument against using monetary policy to prick asset-price bubbles? Using monetary policy to prick an asset-price bubble may have adverse effect on the aggregate economy. (B) The effect of increasing interest rates on asset prices is uncertain. (C) Even though credit-drive bubbles are easier to identify, they are still relatively hard to identify. A bubble may only exist in some asset-prices and monetary policy will affect all asset prices. Which of the following is a disadvantage of the Fed's "just do it" approach to monetary policy? Show answer choices This type of policy make the Fed more susceptible to the time-inconsistency problem. B There is low transparency of policy. It relies on a stable money-inflation relationship. There is low accountability for central bankers. Which of the following is a requirement in selecting a policy instrument? Show answer choices (A) measurability B flexibility (C) predictability (D) controllability