The Problem for a Central Bank Setting a Zero Inflation

question 79

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 nominal wages to reduce labor cost
• D)Economic growth would also have to be zero

---

Definitions:

Understocking

The condition where the inventory levels are too low, risking stockouts, lost sales, and dissatisfied customers.

Demand Mean

The average demand over a specified period of time.

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion in a set of numerical data, indicating how spread out the data points are from the mean.

Souvenirs

Items purchased or acquired to serve as a reminder of a particular place, event, or experience, often during travels.