Canadian economists who prefer 'low' inflation,that is,inflation in the range of 1% to 3% per year,offer all of the following reasons for their preference EXCEPT
A) low inflation is optimal for economic growth.
B) inflation makes it difficult for both buyers and sellers of goods and services to know whether any given change in the price of a product denotes a change in the relative (real) price of the product or a change in the price level,and thus reduces economic efficiency.
C) inflation introduces uncertainty about future price level and thereby interferes with long term planning of households and firms.
D) when inflation is higher and more volatile,people will generally judge long-term contracts as being too risky and this may discourage long-term investment.
E) low inflation promotes greater equality in income distribution.
Correct Answer:
Verified
Q181: Deflation is not a sensible policy goal
Q182: According to the price distortion hypothesis
A) inflation
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A)
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Q187: The Canadian consumer price index fell from
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Q190: The zero bound on nominal interest rate
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