Which of the Following Statements Is Correct,concerning Price Stability as a Monetary

question 78

Multiple Choice

Which of the following statements is correct,concerning price stability as a monetary goal?

• A) In the long run, no inconsistency exists between the price stability goal and the other goals, such as high unemployment.
• B) In the short run price stability often conflicts with the goals of high employment and interest-rate stability.
• C) Neither A nor B is true.
• D) Both A and B are correct.

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Definitions:

Producer Surplus

The gap between the price producers are willing to accept for offering a good or service and the actual price they receive.

World Price

The global equilibrium price of a good or service determined by worldwide supply and demand.

Consumer Surplus

Consumer surplus refers to the difference between what consumers are willing to pay for a good or service and what they actually pay.

Producer Surplus

The difference between what producers are willing to accept for a product versus what they actually receive, usually seen as a measure of producer welfare.