One Concern of Those Who Oppose the Central Bank Targeting

question 131

Short Answer

One concern of those who oppose the central bank targeting inflation at zero is that reducing inflation is costly. What is the cost of reducing the inflation rate?

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Definitions:

Bank Runs

The rapid withdrawal of deposits by customers from a bank or financial institution due to fears of insolvency.

U.S. Banking System

The U.S. Banking System refers to the structure and institutions involved in providing financial services, including savings accounts, loans, and other fiscal transactions, within the United States.

Money Supply

The total amount of money available in an economy at a specific time, including cash, deposits, and other liquid assets.

Medium of Exchange

is an intermediary instrument used to facilitate the sale, purchase, or trade of goods and services between parties.