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Inflation and Monetary Policy

Zero Inflation?

Most economists and financial analysts generally agree that inflation is a bad thing and should be kept to a minimum. But should inflation be zero? This is an entirely different matter subject to much debate.

Read the articles below and do some of your own research in the Cyber Library and/or Internet search engines. Then write a two to three page paper answering the following question:

What causes inflation? Should the Federal Reserve aim for an inflation rate of zero? Please explain your reasoning.

Defend your answer with references to the assignment articles and the background materials.

Solution Preview

Inflation is a situation of a sustained increase in prices of commodities. A very high inflation rate may cause money to have a low purchasing power because people would have lesser capacity to buy goods and services. Many people also say that they feel poorer if there is an increase ...

Solution Summary

Inflation and monetary policy is examined. Economist and financial analyst for inflations are examined.