ABSTRACT
Price stability is a conflict-of-interests goal, not a consensus goal as is full employment. This chapter discusses an upward movement in the price level other than one provoked by the government to draw resources away from the private sector that is the type of price rise. The aim usually is to halt or perhaps to limit the rise and seldom if ever to reverse it; in this respect price policy is asymmetrical with employment policy, which attempts to return to a previous level of higher employment. A rough trade-off is thus required between the rapidity with which price stability is achieved and the level of unemployment that is to be tolerated. An increase in the personal income tax may check consumer spending very little in countries where wage negotiations that are based, ostensibly, on gross pay are in fact influenced by the relation of take-home pay to the cost-of-living index.
