What Is the Main Problem with Mild Inflation, According to Some

question 144

Multiple Choice

What is the main problem with mild inflation, according to some economists?

• A) It reduces the size of the GDP gap.
• B) It leads to unanticipated deflation.
• C) It increases frictional and structural unemployment in the economy.
• D) It diverts productive time toward activities to hedge against inflation.

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Definitions:

Random Variable

A variable representing the numerical results possible from a stochastic process.

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A small, relatively inexpensive computer typically used for personal or small business tasks.

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A detailed analysis or classification of something into its component parts.

Probability Distribution

A mathematical function that calculates the likelihood of various potential outcomes of an experiment.