The Problem for a Central Bank Setting a Zero Inflation

question 72

Multiple Choice

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

• A) the risk of high employment.
• B) it is impossible to have zero inflation.
• C) firms would have to cut the nominal wage to reduce the real wage.
• D) economic growth would also have to be zero.

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Definitions:

DSM-5

The Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, a comprehensive classification of mental disorders by the American Psychiatric Association.

Binge Eating Disorder

A serious eating disorder marked by recurrent episodes of eating large quantities of food often quickly and to the point of discomfort.

Food Restriction

The deliberate limitation of food intake, often practiced in the context of dieting, fasting, or eating disorders.

Semi-Starvation

A state of receiving insufficient calories to meet basic metabolic needs, which can result in severe physical and psychological effects.