The Higher the Average Rate of Inflation, the More Frequently

question 39

Multiple Choice

The higher the average rate of inflation, the more frequently firms must adjust their prices, which implies that a high rate of inflation:

• A)has no effect on the slope of the short-run aggregate supply curve.
• B)should make the short-run aggregate supply curve flatter.
• C)makes the short-run aggregate supply curve steeper.
• D)causes prices to be sticky.

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Definitions:

Participants

Individuals who take part in something, especially in an experiment or study.

Decision Making

The cognitive process of selecting a course of action among several alternatives to achieve a desired outcome.

Reasoning

refers to the cognitive process of looking for reasons, engaging in logical thinking, and arriving at conclusions based on premises.

System II Thinking

A cognitive process that involves analytical, effortful, and logical thinking as opposed to quick, instinctual, and often biased System I thinking.