Many central banks use ‘inflation targeting’. Their principal aim is to achieve

Many central banks use ‘inflation targeting’. Their principal aim is to achieve a particular annual rate of inflation within an acceptable range. For example, they might aim for a 2% rate of inflation but will accept a rate between 1% and 3%. Some economists claim that inflation targeting will help reduce the actual rate of inflation. The Central Bank of Turkey uses this approach and Table 5.1 shows how well it has worked.

In 2008 Turkey faced two particular difficulties. The New Turkish Lira (TRY) depreciated by 30% and food prices rose because of drought. Within the Turkish Consumer Price Index, food has a high weighting of 31%.How successful five countries were in controlling inflation in 2008 is shown in Figure 5.4.

a. (i) In which year was Turkey most successful in meeting its inflation target?
(ii) In which year was Turkey least successful in meeting its inflation target?

b. Explain the likely effect of the depreciation of the New Turkish Lira on Turkey’s rate of inflation.

c. With reference to Figure 5.4, how might differences between the inflation targets and actual inflation rates in Chile and Brazil in 2008 be explained?

d. How might having a target for inflation affect the causes of inflation?

e. Discuss the possible problems of constructing an accurate consumer price index.

 

Stressed over that homework?

Essay deadline breathing down your neck?

Let’s cut to the chase: Why struggle when you can ace it with zero hassle?

Whether it’s essays, research papers, or assignments — we’ve got you covered.

✅ Expert writers
✅ 100% original work
✅ No AI tools, just real pros

Stressed about your essay or homework? Get a top-quality custom essay NOW!!! Stop worrying. Start succeeding.

GradeEssays.com
We are GradeEssays.com, the best college essay writing service. We offer educational and research assistance to assist our customers in managing their academic work. At GradeEssays.com, we promise quality and 100% original essays written from scratch.
Contact Us

Enjoy 24/7 customer support for any queries or concerns you have.

Phone: +1 213 3772458

Email: support@gradeessays.com

© 2020 -2025 GradeEssays.com. All rights reserved.

WE HAVE A GIFT FOR YOU!

15% OFF 🎁

Get 15% OFF on your order with us

Scroll to Top