The most common definition that monetary policymakers use for price stability is
A)low and stable deflation.
B)an inflation rate of zero percent.
C)high and stable inflation.
D)low and stable inflation.

Question

Quizplus · Accepted Answer

The most commonly used definition of price stability by monetary policymakers is low and stable inflation, typically around 2% per year. This allows for stable economic growth and avoids harmful deflationary pressures. Inflation rates of zero percent or negative are not necessarily optimal as they can lead to economic stagnation or recession. High and unstable inflation can also be harmful to an economy as it erodes purchasing power and undermines consumer and investor confidence.

The Most Common Definition That Monetary Policymakers Use for Price