question archive What is a good opinion about the information below 1- This is because other important goals like targeting growth rate are taken care of by the government
What is a good opinion about the information below 1- This is because other important goals like targeting growth rate are taken care of by the government
Subject:EconomicsPrice: Bought3
What is a good opinion about the information below
1- This is because other important goals like targeting growth rate are taken care of by the government. If Federal involves in other functions it will loose the focus on inflation targeting.
2- Arguments in favour of inflation targeting:
Since high inflation is bad for economy as it reduces the worth of savings, reduces purchasing power etc. In short, the cost of inflation can be avoided by keeping inflation at the targeted level.
It avoids boom as well as bust.
If inflation target is maintained, then the credibility of Federal will go up and this can help the Federal in making changes in monetary policy easily.
3- Arguments against inflation targeting:
Other goals are ignored as inflation targeting becomes the sole aim of Federal.
Sometimes hig inflation is good for the economy to fight deflationary pressures.
Fixed inflation targets doesnt necessariy imply stability in the economy as other macroeconomic indicators also play crucial role.
4- In the year of 2016 , The Government of Canada and the Bank of Canada agreed that the inflation target will continue to be defined in terms of the 12-month rate of change in the total CPI, that it will continue to be the 2 per cent mid-point of the 1 to 3 per cent inflation-control range, and that the agreement will run for another five-year period, ending 31 December 2021.
