When people are trying to predict the level of inflation that the central bank will choose, why would it be a mistake for them to think that the central bank would choose its target level of inflation? Why is the inflation bias higher if the central bank cares a lot about reducing unemployment?

Answer rating: 100% (QA)

It can be mentioned that it would not always be correct for the people to expect inflation rate at the target rate because of the following reasons 1 ... View the full answer