Most Economists Agree That the Target Rate of Inflation for the Central

question 4

Multiple Choice

Most economists agree that the target rate of inflation for the central banks should be:

• A) between 7 and 9 percent.
• B) less than zero.
• C) above zero for fears of deflation.
• D) something over 3 but less than 6 percent.

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Definitions:

Market Price

The current price at which a good or service can be bought or sold in a given market.

Economic Profits

Profits calculated by subtracting both explicit and implicit costs from total revenues, representing the additional income earned over and above the opportunity costs.

Competitive Market

A market structure characterized by a large number of buyers and sellers, free entry and exit, and a product for which each seller offers an identical product.

Market Price

Market price is the current price at which an asset or service can be bought or sold in a given market.