Price stability is an economic condition where the general price level of goods remains relatively constant over time. It is held that a stable price level leads to the efficient use of the economy’s scarce resources. For instance, let us say that the average price level stands at 100. Price Stability Policy Leads to InstabilityLet us say that the yearly growth rate of the price level is starting to exhibit a decline well below the two percent mark set by the Fed’s economists. Businesses would be able to observe clearly the signals issued by consumers in terms of relative prices and act accordingly.