In the context of monetary policy frameworks, 'Average Inflation Targeting' involves:
A. Targeting an average inflation rate over a multi-year period, allowing temporary overshoots to make up for past undershoots
B. Targeting only the current inflation rate
C. Only targeting the price level
D. Ignoring past inflation outcomes completely
Answer: Option A
Solution (By JKSSB Mock Tests)
Average inflation targeting commits the central bank to achieve an average inflation rate over a longer period, so that periods of below-target inflation are followed by periods of above-target inflation (and vice versa).
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