Regarding Inflation, Which of the Following Is a True Statement

question 171

Multiple Choice

Regarding inflation, which of the following is a true statement?

• A) Unanticipated inflation is a change in the general level of prices that catches most decision makers by surprise.
• B) High and variable rates of inflation are easy for decision makers to forecast accurately.
• C) High and variable rates of inflation can increase GDP by reducing investment.
• D) When decision-makers are able to anticipate slow, steady rates of inflation, prices become more unstable and there is a negative impact on the level of prosperity.

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Definitions:

Panel (A)

This term is ambiguous without context but usually refers to a specific subset or group within a broader survey or study, denoted as "A" for distinction.

Long-Run Equilibrium

A state in a market where, given sufficient time, all factors of production and costs are variable, allowing firms to enter or exit the market, and no economic profit is earned.

Monopolistic Competition

A market structure where many firms sell products that are similar but not identical, allowing for competition based on product differentiation.

Market Demand

The total demand for a product or service in a market, aggregating all individual demands at various prices.