All of the Following Are Reasonable Arguments Against Adopting a Zero

question 23

Multiple Choice

All of the following are reasonable arguments against adopting a zero inflation target EXCEPT that a zero inflation target:

• A) makes the undesirable effects of deflation more likely.
• B) prevents the central bank from achieving a negative real interest rate.
• C) is not consistent with long-run price stability.
• D) based on the CPI would not generate "true" price stability because of CPI measurement problems.

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Definitions:

1700 and 1780

Reference to a period marked by significant changes, including the growth of European colonial empires and the beginnings of the Industrial Revolution.

European Traders

Refers to merchants from Europe engaged in international trade, notably active in the trade of goods, slaves, and commodities during the colonial period.

African Slaves

People from the African continent forcibly taken and transported to other parts of the world primarily for free labor through the transatlantic slave trade.

Seventeenth Century

The period from January 1, 1601, to December 31, 1700, marking the 17th century in the Gregorian calendar, noted for significant cultural, scientific, and geographical explorations.