Which of the Following About Inflation Is True

question 169

Multiple Choice

Which of the following about inflation is true?

• A) Anticipated inflation is an increase in the price level that comes as a surprise, at least to most individuals.
• B) Unanticipated inflation is a change in the price level that is widely expected.
• C) Decision makers are generally able to anticipate slow steady rates of inflation with a fairly high degree of accuracy.
• D) Inflation will increase the prices of goods and services that households purchase but not the wage rates of workers.

---

Definitions:

Absolute Market Power

The ability of a single economic actor, or a group of actors, to control market prices, output, and/or the market entry of new competitors without external interference.

Barriers To Entry

Barriers to entry are obstacles that make it difficult for new firms to enter a market, including high startup costs, regulatory hurdles, and established competition.

Monopoly

A market structure characterized by a single seller selling a unique product with no close substitutes, leading to significant control over the market price.

Close Substitutes

Products or services that can serve as replacements for each other with minor adjustments, often similar in function or purpose.