One argument for some inflation is you are more likely to get a pay raise it makes prices in real terms increase it keeps nominal interest rates low the probability of the zero bound problem (or effective lower bound problem) is reduced

One argument for some inflation is you are more likely to get a pay raise it makes prices in real terms increase it keeps nominal interest rates low the probability of the zero bound problem (or effective lower bound problem) is reduced

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter17: The Trade-off Between Inflation And Unemploy

Section: Chapter Questions

Problem 2TY

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One argument for some inflation is
you are more likely to get a pay raise
it makes prices in real terms increase
it keeps nominal interest rates low
the probability of the zero bound problem (or effective lower bound problem) is reduced

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