A Zero Inflation Target

question 31

Multiple Choice

A zero inflation target

• A)eliminates the short-run unemployment-inflation tradeoff
• B)is almost impossible to achieve since it would require an extremely high natural rate of unemployment
• C)can only be achieved if wage indexation is implemented nationwide
• D)will have much lower costs than an explicit target of achieving a 4% long-term inflation rate
• E)may not be as good as a positive inflation target, because it makes it more difficult to achieve full employment

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Definitions:

Practical Example

A real-world scenario used to illustrate or explain a theory or concept.

Equity Theory

A theory in social psychology that explains how individuals perceive fairness in distribution of resources, leading to satisfaction or dissatisfaction based on perceived inequalities.

Underpayment

The situation in which an individual or group receives less compensation than is fair or deserved for their work or services.

Overpayment

The situation in which an individual or entity receives more money than is due for services provided or work done.