The 5-year target for inflation, from April 1, 2021, to March 31, 2026, has been set by the central government, with an upper and lower tolerance limit of and percent, respectively.a.5,2b.6,2c.4,8d.4,5

Inflation Target'

Under Section 45ZA, RBI Act, 1934, the Central Government, in consultation with the RBI determines the inflation target in terms of the Consumer Price Index (CPI) once in _________years.a)  Three Yearsb)  Four Yearsc)  Five Yearsd)  Six Years

Inflation

How does inflation targeting help reduce the time-inconsistency problem of discretionary policy?

Explain how inflation targeting can reduce the problem of inflation bias.