Answer :
A nominal variable, such as the inflation rate or the money supply, which ties down the price level to achieve price stability is called nominal anchor.
What is nominal anchor?
The behavioral regulation known as a nominal anchor is employed by central banks when they are about to reduce nominal variables like a nation's overall price level. More specifically, these controls are put in place to prevent either deflation or inflation in the nation. The Central Banks frequently use nominal anchors such as inflation targeting, monetary aggregate targeting, asset price objectives, and exchange rate targets. Different policy-making strategies that support maintaining the stability of the overall price level are developed using the nominal anchor.
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