Question

One of the goals of the federal reserve is price stability. for the fed to achieve this​ goal,
a. the level of unemployment should be​ low, less than​ 6%, and the inflation rate should be near zero percent.
b. prices should not be increasing and the inflation rate should be near zero percent.
c. the rate of inflation should be​ low, such as​ 1% to​ 3%, and should be fairly consistent.
d. the inflation rate should be consistent but the rate of inflation can be​ zero, low​ (such as​ 1-3%), or high​ (such as​ 8-10%).

Answer 1

One of the goals of the federal reserve is price stability. For the Fed to achieve this​ goal, the rate of inflation should be​ low, such as​ 1% to​ 3%, and should be fairly consistent.

When an organization is wanting to find price stability, they are meaning they want to avoid inflation and deflation. Although it's very hard to have no deflation or inflation, 1-3% is a low number that they are okay with. Inflation is a rise in the price whereas deflation is a decrease in the price.