Zero Inflation

question 6

Multiple Choice

Zero inflation

• A)would limit the flexibility of the labor market and so could at times raise unemployment.
• B)might be dangerous because it could lead to rapidly increasing prices.
• C)would make it easy for the Central bank to create negative real interest rates.
• D)is impossible to achieve in the real world.

Analyze the impact of monetary policy announcements on inflation expectations and Phillips curves.

Examine the effects of economic crises on price levels and output.

Understand the role and effects of contractionary monetary policy on disinflation.

Evaluate the Federal Reserve's strategies to counteract adverse supply shocks on unemployment.

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