A central bank is mandated to target an annual inflation rate of 2.0%. The government's mandate specifies that if inflation rises to 3.0%, the central bank governor must write a formal public letter of explanation and implement contractionary policy. However, if inflation falls to 1.0%, no such formal explanation or mandatory intervention is required.
This policy framework is an example of:
An asymmetric inflation target
A symmetric inflation target
The indexation of monetary policy instruments
A conflict between macroeconomic policy objectives
77 exam-style questions on OCR A Level Economics Inflation. Each one has a worked solution and a mark scheme showing where the marks go.