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A central bank's pursuit of policies that control inflation and reduce business cycle fluctuations best illustrates which core principle? Multiple Choice Markets determine prices and allocate resources.
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A central bank's pursuit of policies that control inflation and reduce business cycle fluctuations best illustrates which core principle? Multiple Choice Markets determine prices and allocate resources. Time has value. Stability improves welfare. Risk requires compensation.

User Niels Kristian
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Answer:

Stability improves welfare

Step-by-step explanation:

In simple words, central banks throughout the world try to cope with instability in their economic systems, in the form of inflation and deflation, by using various monetary and fiscal policies as well as related tools.

This is evidence of the fact that stability in an economy enhances welfare as the money value will not fluctuate continuously. Therefore, government can manage risk, tackle shocks and perform economic processes more efficiently.

User Danny Broadbent
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