Central banks commonly aim to keep the price level
A) declining slightly
B) perfectly constant
C) growing by about 1% per year
D) rising by about 2% per year
E) increasing by about 5% per year

Question

Quizplus · Accepted Answer

Central banks commonly aim to keep the price level rising by about 2% per year. This is to maintain a moderate level of inflation, which encourages spending and investment while preventing deflation, which can potentially harm the economy by leading to decreased consumer spending and increased debt burdens.

Central Banks Commonly Aim to Keep the Price Level