All of the Following Are Reasonable Arguments Against Adopting a Zero

question 33

Multiple Choice

All of the following are reasonable arguments against adopting a zero inflation target except that a zero inflation target:

• A)makes the undesirable effects of deflation more likely.
• B)prevents the central bank from achieving a negative real interest rate.
• C)is not consistent with long-run price stability.
• D)based on the CPI would not generate "true" price stability because of CPI measurement problems.

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Definitions:

Compliance

The act of conforming to a rule, command, or request, either willingly or through pressure or obligation.

Stuck

A state of being unable to move forward or make progress in a particular situation or task.

Trait Resistance

A personality characteristic that involves resilience and an ability to withstand stress or adversity.

Reduced Structure

A less formal or less rigid framework or environment, which can allow more flexibility and adaptability.