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Using a nominal anchor to conduct monetary policy has many benefits, except that: O A. A nominal anchor provides a direct measure to see if

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Using a nominal anchor to conduct monetary policy has many benefits, except that: O A. A nominal anchor provides a direct measure to see if the central bank is achieving its goal. O B. A nominal anchor helps promote price stability by tying inflation expectations to low levels directly through its constraint on the value of money. O C. A nominal anchor creates a rigid rule that does not allow a central bank to adjust to unforeseen circumstances. O D. A nominal anchor can limit the time-inconsistency problem by providing an expected constraint on monetary policy. A central bank can choose among several options for a nominal anchor, which of the following can be used as a nominal anchor? O A. Money supply O B. Inflation rate O C. Exchange rate O D. Both A and B are correct O E. All of the above are possible nominal anchors

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