Which of the following is true regarding the target inflation rate? Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. multiple choice 1 A positive target inflation rate increases the likelihood that firms will need to reduce nominal wages when the demand for labor falls. A positive target inflation rate is preferred because the country will be able to better avoid a liquidity trap. A positive target inflation rate increases the risk of deflation. A target inflation rate of zero is a good policy because this will keep prices stable. Your senators now claim that lowering prices would be good for everyone"Who doesn't like lower prices, after all?" They tell you they plan to lobby for deflation. Which of the following is true about deflation? It multiple choice 2 makes debt harder to pay back because loans are made in nominal terms, and less borrowing means less spending. decreases the value of savings in real terms. increases consumption because people like falling prices. will make people to expect prices to start rising and will want to spend more before they do