Price level stability
A) has no relationship to growth in potential GDP.
B) is thought by most economists to be reached with a measured inflation rate of between 0 and 2 percent a year.
C) is the most important tool of the Federal Reserve.
D) was attained by the Fed for the period between 1979 and 2001.

Question

Quizplus · Accepted Answer

Price level stability, as agreed upon by most economists, is generally achieved when the inflation rate is maintained at a low and stable rate, typically between 0 and 2 percent per year. This range is considered conducive to economic stability and growth, as it minimizes uncertainty and allows individuals and businesses to make long-term financial plans without the fear of unpredictable changes in the purchasing power of money.

Price Level Stability