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

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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.

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