Setting a Target of Zero for the Inflation Rate May

Multiple Choice

Setting a target of zero for the inflation rate may be sub-optimal because

A) measured inflation is an overestimate, so zero measured inflation effectively implies deflation
B) the redistributive effects of unexpected inflation are Pareto efficient
C) a stagnant price level precludes the possibility of economic growth
D) deflation encourages investment, so the target rate for inflation should be negative
E) all of the above