Some countries have had high inflation for a long time. Others have had low or moderate inflation for a long time. Which of the following, at least in theory, could explain why some countries would continue to have high inflation?
a. High inflation countries have relatively small sacrifice ratios and so see no need to reduce inflation.
b. Inflation reduction works best when it is unexpected, and people in high inflation countries would quickly anticipate any change in monetary policy.
c. In a country where inflation has been high for a long time, people are likely to have found ways to limit the costs.
d. In a country where inflation has been high for a long time, there are no costs to the inflation.
c
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In the summer 2012 the lobster catch in Maine was especially large, but instead of celebrating the fisherman were suffering from a lower total revenue
(Source: New York Times, July 28, 2012 ) We learn from the article that despite the larger quantity of lobster caught, the total revenue of the fisherman decreased. This fact means that the demand for lobster is A) unit elastic. B) elastic. C) inelastic. D) perfectly elastic.
The U.S. central bank ________
A) usually raises taxes to stabilize a slowing economy B) encourages higher savings rates by raising the national sales tax C) is known as the Federal Reserve D) all of the above E) none of the above