The problem for a central bank setting a zero inflation policy would be:

Question

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Setting a zero inflation policy would require firms to cut nominal wages to reduce labor costs, which could lead to social unrest and economic turmoil. It is also not possible to have zero inflation as some level of inflation is necessary to stimulate economic growth. The risk of high employment (A) and economic growth being zero (D) are not necessarily inherent problems with a zero inflation policy.

The Problem for a Central Bank Setting a Zero Inflation