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Price stability is important because it contributes to high levels of economic activity and employment. It improves the transparency of the price mechanism, which is
Price stability is important because it contributes to high levels of economic activity and employment. It improves the transparency of the price mechanism, which is crucial for efficient allocation of resources. It also helps avoid unproductive activities to hedge against the negative impact of inflation or deflation. Moreover, it reduces distortions caused by inflation or deflation, which can exacerbate the distortionary impact on economic behavior of tax and social security. Lastly, it prevents an arbitrary redistribution of wealth and income as a result of unexpected inflation or deflation. Full employment, on the other hand, is important because it leads to optimum growth of the economy through efficient usage of resources. The government plays a crucial role in providing employment opportunities, which must be supported by society. Ensuring sufficient employment also includes providing educational opportunities and the right to vocational training in specific technical fields. Full employment can reduce criminal cases in society as everyone has a job and money to survive. Lastly, achieving full employment helps avoid unemployment and reduce unemployment rates in a country
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