Question

One characteristic function of all central banks is to ensure price stability for the currency. What does this mean? A. ensuring large levels of inflation exist B. preventing any inflation of any kind C. preventing excessive changes in the value of the currency​

Answer 1

Answer:

B. preventing any inflation of any kind

Explanation:

Option B is the answer.

The central banks actually work in order to ensure price stability. This means that they work to prevent inflation of any kind.

Inflation is known to be the rate at which the prices of goods and services in an economy rise. This means that inflation takes place when prices increase as a result of increase in production costs. When there is a surge for the demand of products and services, this leads to inflation as the consumers of those products and services are ready to pay more for them.

It is at this condition that the central banks step in to ensure price stability. Thy achieve this by adjusting the supply of money.