Mild inflation of 2 or 3 percent is said to be good for the economy.

Question

BlackTom AI · Accepted Answer

In macroeconomic discussions, a moderate, stable rate of inflation is often viewed as conducive to growth and employment. 
Option 1: True. The statement that mild inflation of about 2% or 3% is considered good for the economy aligns with mainstream central bank targets, which aim for a low positive inflation to avoid deflation, to provide room for real adjustments in prices and wages, and to encourage borrowing and investment. A modest inflation rate can help reduce the risk of deflationary spirals and keeps real interest rates from becoming too high, supporting aggregate demand. 
Option 2: False. This would be incorrect because it suggests that any positive inflation is harmful or that high inflation is necessary for economic health. In reality, too high inflation is damaging, erodes purchasing power, distorts price signals, and creates uncertainty; however, a carefully managed, modest inflation rate around 2% is generally considered desirable, not excessive. Therefore the blanket claim that mild inflation is bad would ignore the economic rationale for targeting a low, stable inflation path.

Introduction to Personal Finance CP - 2 - Beatty - Preparatory Academy - 1st Semester - 2025/2026 Final Exam- Requires Respondus LockDown Browser

Mild inflation of 2 or 3 percent is said to be good for the economy.

View Explanation

Log in for full answers

Similar Questions

In the long run, countries with higher rates of money growth usually have:

When inflation occurs

Inflation is a rise in

Question31 Generally speaking, the rate of inflation ________ during a recession. falls, then rises None of these answers is correct. stays the same rises falls ResetMaximum marks: 1 Flag question undefined

Question33 Generally speaking, the rate of inflation ________ during a recession. falls, then rises None of these answers is correct. falls rises stays the same ResetMaximum marks: 1 Flag question undefined

According to the article “As the Global Economy Picks Up, Inflation Is Oddly Quiescent Links to an external site. ,” why were economists expecting inflation to pick up in 2017?

Unanticipated inflation:

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler