The Problems of Raising the Level of the Inflation Target

question 66

Multiple Choice

The problems of raising the level of the inflation target include

• A)if the zero-lower-bound problem is rare,then the benefits of a higher inflation target are not very large.
• B)the costs of higher inflation in terms of the distortions it produces in the economy are high.
• C)it is more difficult to stabilize the inflation rate at a higher targeting level.
• D)all of the above.

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