The Main Cost That Low Inflation Imposes on an Economy

question 15

Multiple Choice

The main cost that low inflation imposes on an economy is that low inflation

• A)inevitably leads to high inflation.
• B)distorts some economic decisions.
• C)reduces real wages.
• D)benefits lenders at the expense of borrowers.

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Definitions:

LSD

Lysergic acid diethylamide, a powerful hallucinogenic drug that alters perception, thoughts, and feelings.

Hallucinations

Perceptions in a conscious and awake state in the absence of external stimuli that have qualities of real perception.

Pain-killing Neurotransmitters

Chemical substances in the nervous system that reduce the sensation of pain, such as endorphins.

Foot Shocks

Unpleasant electric shocks applied to the feet, often used in behavioral experiments to study learning and conditioning.