There is ongoing debate about whether central banks should target zero inflation (which would mean a constant value for the U.S. dollar over time) or low, stable inflation (which would mean a continuously but slowly declining value of the dollar over time, as is the case now). Although some economists are in favor of a zero inflation policy and therefore a constant value for the U.S. dollar, others contend that such a policy limits the ability of the central bank to control interest rates and stimulate the economy when needed. COUNT 5
QSN1 What would zero inflation mean for the US dollar over time? ANS1 constant value QSN2 What would result in a slow declining of the value of the dollar over time? ANS2 low, stable inflation QSN3 Who is in favor of a zero inflation policy? ANS3 some economists QSN4 A zero inflation policy would limit who's influence and ability to react? ANS4 central bank QSN5 With a zero inflation rate, what would the central bank be unable to do other than control interest rates? ANS5 stimulate the economy