High and Uncertain Inflation Is Damaging to the Economy Because

question 109

Multiple Choice

High and uncertain inflation is damaging to the economy because

• A)the price system is no longer capable of effectively signalling changes in relative scarcity through changes in relative prices.
• B)individuals who receive their incomes in fixed nominal terms are made worse off.
• C)there can be unexpected reallocations of real income between workers and firms.
• D)there can be unexpected reallocations of real income between borrowers and lenders.
• E)All of the above.

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Definitions:

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