Stability Through Inflation
To be sure, a "stable" price level may be defined in significantly different ways. Some, like Keynes, may prefer to consider, either as a datum or a desideratum, a stable level of wage rates (or perhaps of factor prices) as the norm, implied in the use of "wageunits" as a numeraire in which to express economic variables;l others may require a consumers' or cost-of-living price index to remain steady, and still others may fix on some index defined in terms of weights proportional to the volume of trading in various factors, intermediate and final commodities, and services. In a progressive economy, of course, with the purchasing power of labor presumably increasing, at least the wage-unit norm and the cost-of-living norm will mean substantially different things. Nevertheless in most economic discussion, equilibrium appears to imply the constancy of some significant price index, at least approximately.