Which of the following is not a reason that the central bank does not aim for zero inflation?
A) Measured inflation tends to be higher than actual inflation.
B) The inflation rate would be more likely to be negative.
C) This would limit the ability of the central bank to stimulate the economy
D) Positive inflation "greases the wheels" of the labour market.

Question

Quizplus · Accepted Answer

Measured inflation tends to be higher than actual inflation is not a reason for avoiding zero inflation. The other options are valid reasons: zero inflation could lead to deflation, limit monetary policy effectiveness, and hinder wage adjustments.

Which of the Following Is Not a Reason That the Central