Answer :
To minimize price level increases, the primary focus should be on achieving price stability and maintaining full employment.
Price stability refers to maintaining a low and stable rate of inflation, which helps to minimize fluctuations in the general price level of goods and services in an economy. Central banks often use monetary policy tools, such as interest rate adjustments and open market operations, to control inflation and ensure price stability. By doing so, they aim to create a stable economic environment where businesses and consumers can make informed decisions, leading to sustainable economic growth.
Full employment, on the other hand, is a situation where all individuals who are willing and able to work can find jobs. In an economy operating at full employment, there is no cyclical unemployment, and resources are efficiently utilized. When full employment is achieved, it can help to minimize price level increases by ensuring a stable supply of goods and services in the market. In addition, it prevents wage-price spirals, where rising wages lead to higher prices and vice versa.
Although marginal utility and GDP are important economic concepts, they are not as directly related to minimizing price level increases as price stability and full employment. Marginal utility refers to the additional satisfaction a consumer gains from consuming one more unit of a good or service, while GDP measures the total value of goods and services produced within a country during a given time period.
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