Price stability is desirable because:
A) it reduces the difficulty with making decisions about resource allocation.
B) income and wealth are moved from those on fixed incomes to those on indexed salaries.
C) real interest rates can change to protect lenders against unanticipated inflation.
D) businesses engage in productive activities that emphasize short-term profits.

Question

Quizplus · Accepted Answer

Price stability reduces uncertainty in the economy, making it easier for individuals and businesses to make informed decisions about resource allocation without worrying about unpredictable inflation or deflation.

Price Stability Is Desirable Because