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Economics · May / June 2026 · Paper 11 · Question 18

2281Inflation

The government of a country aims for a low rate of inflation of 2% per year. What is a reason for choosing this aim?

  1. AA government budget surplus is guaranteed.
  2. BFalling prices are always a good thing.
  3. CGreater economic certainty will increase investment.
  4. DMenu costs and shoe-leather costs will be zero.

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Correct answer: C. Greater economic certainty will increase investment.

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