Stable money and prices are a key source of economic growth because
A) they allow activist policymakers to fine tune the economy.
B) uncertainty and instability in prices will attract investors and business decision makers.
C) price instability increases capital formation.
D) price stability reduces the risks that accompany investment and other long-term commitments.

Question

Quizplus · Accepted Answer

Price stability reduces the risks that accompany investment and other long-term commitments, making it easier for businesses and investors to make decisions and allocate resources efficiently. Uncertainty and instability in prices can lead to hesitation and reluctance to invest or make long-term commitments, which can hinder economic growth. Activist policymakers may use other tools to fine tune the economy, but stable money and prices provide a foundation for sustainable economic growth.

Stable Money and Prices Are a Key Source of Economic