Why should the central bank aim for zero inflation?
A)because reducing inflation imposes temporary costs but provides permanent benefits
B)because reducing inflation from 2 percent to 0 percent is virtually costless
C)because the government has indexed tax brackets to prevent the adverse effects of inflation
D)because the costs of inflation are very high

Question

Quizplus · Accepted Answer

Reducing inflation can impose temporary costs, such as unemployment or reduced output, but achieving zero inflation can provide long-term benefits like price stability and predictability, which can enhance economic planning and growth.

Why Should the Central Bank Aim for Zero Inflation