PRICE STABILITY Meaning and
Definition
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Price stability refers to the state of an economy during which the overall level of prices for goods and services remains relatively constant or experiences only minimal fluctuations over a sustained period of time, usually characterized by a low and predictable rate of inflation. In other words, it refers to an economic environment where the general price level remains steady, allowing individuals, businesses, and policymakers to make economic decisions without the adverse effects of unpredictable changes in prices.
Maintaining price stability is a key objective for central banks and policymakers, as it is considered essential for a healthy and sustainable economy. Price stability helps in promoting economic growth, as it facilitates long-term planning and investment by businesses, encourages consumer confidence, and enhances the efficacy of monetary policy.
In practice, central banks aim to achieve price stability by setting and implementing appropriate monetary policies. They often use monetary tools like interest rates and open market operations to influence the supply of money and credit in the economy to maintain stable consumer price levels. Central banks will generally target a specific inflation rate as part of their price stability objective, aiming to keep it within a desired range, typically around 2%. This target provides a guideline for assessing and adjusting monetary policy to ensure price stability is maintained.
Overall, price stability is an important aspect of economic stability, providing a solid foundation for sustainable economic growth, investment, and financial planning.
Common Misspellings for PRICE STABILITY
- orice stability
- lrice stability
- 0rice stability
- peice stability
- pdice stability
- pfice stability
- ptice stability
- p5ice stability
- p4ice stability
- pruce stability
- prjce stability
- prkce stability
- proce stability
- pr9ce stability
- pr8ce stability
- prixe stability
- prive stability
- prife stability
- pride stability
- pricw stability
Etymology of PRICE STABILITY
The word "price" has its roots in the Old French word "pris", meaning "value" or "price", which originated from the Latin word "pretium". The term "stability" evolved from the Latin word "stabilitas", meaning "steadiness" or "firmness". When combined, "price stability" refers to the state of maintaining a stable or steady level of prices for goods and services in an economy.
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