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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Definitions:

Thymine

A nitrogenous pyrimidine base found in DNA.

Carbohydrate

Organic compounds consisting of carbon, hydrogen, and oxygen, serving as a major source of energy in diets.

Lipid

A group of naturally occurring molecules that includes fats, waxes, sterols, fat-soluble vitamins (such as vitamins A, D, E, and K), monoglycerides, diglycerides, triglycerides, phospholipids, and others.

Nucleic Acid

A complex organic substance present in living cells, especially DNA or RNA, whose molecules consist of many nucleotides linked in a long chain, fundamental for the transmission of genetic information.