In 2012, U.S. core inflation was 2.1 percent. This inflation rate
A) is lower than the inflation rate that the Fed accepts as creating stable prices.
B) is about equal to the inflation rate that the Fed accepts as creating stable prices.
C) is more than 2 percentage points higher than the inflation rate that the Fed accepts as creating stable prices.
D) None of the above answers are correct because the Fed has never associated an inflation rate with stable prices.

Question

Quizplus · Accepted Answer

The Federal Reserve generally targets an inflation rate of around 2% as indicative of price stability, so a 2.1 percent inflation rate is about equal to what the Fed considers as creating stable prices.