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.

Question

Quizplus · Accepted Answer

In the long run, price stability does not conflict with other economic goals like high employment, as a stable price level supports sustainable economic growth, which in turn can support high employment levels. However, in the short run, achieving price stability can sometimes conflict with the goal of high employment and interest-rate stability, as measures to control inflation (such as raising interest rates) can lead to higher unemployment and interest rate volatility.

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