Policy makers have come to recognize that price stability should be a, long-run

Question

Policy makers have come to recognize that price stability should be a, long-run goal of monetary policy because a. Price stability is actually not the long-run goal of monetary policy; it is a short-run goal. b. it keeps the public guessing, which makes the conduct of monetary policy much easier. c. short-run inflation targets won't work due to the economy's self-correcting mechanism, and could generate business cycle volatility. d. Price stability is not the goal of monetary policy, it is money-supply stability.

Explanation / Answer

Policy makers have come to recognize that price stability should be a, long-run goal of monetary policy because :

short-run inflation targets won't work due to the economy's self-correcting mechanism, and could generate business cycle volatility

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