Asked by Just_an _Memory on Jul 20, 2024
Verified
Economists generally argue that
A) neither high inflation nor moderate inflation is very costly.
B) costs of both high and moderate inflation are quite large.
C) high inflation is costly, but costs of moderate inflation are not nearly as large as the public believes.
D) costs of moderate inflation are nearly zero whereas high inflation is quite costly.
High Inflation
A period characterized by a rapid increase in prices, eroding purchasing power.
Moderate Inflation
A situation where the general price level of goods and services rises at a modest rate over time.
- Comprehend the effects of inflation on an economy and differentiate between high and moderate inflation.
Verified Answer
BM
Bonga MthembuJul 25, 2024
Final Answer :
C
Explanation :
High inflation is widely recognized as costly due to its unpredictability and impact on economic decisions, while the costs of moderate inflation are often considered to be lower than public perception suggests. Moderate inflation can have some benefits, such as avoiding deflation and potentially helping to lubricate the wheels of the economy.
Learning Objectives
- Comprehend the effects of inflation on an economy and differentiate between high and moderate inflation.