Discussion
Price Stability implies promoting ______with considerable emphasis on price stability:
Answer: B
Correct answer: Economic Development
The formulation is that monetary policy promotes economic development with considerable emphasis on price stability - the two held together rather than one subordinated to the other.
The emphasis on stability is not an end in itself but a condition of development: high and variable inflation distorts investment decisions, erodes savings and falls hardest on those with fixed incomes, so it undermines the growth it might appear to accompany. This is the reasoning behind the flexible inflation targeting framework adopted in 2016.
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