Why Are Economists Concerned About Inflation

question 78

Multiple Choice

Why are economists concerned about inflation?

• A) Inflation generally causes unemployment rates to rise.
• B) Real GDP is necessarily falling when there is inflation.
• C) Inflation lowers the standard of living for people whose income does not increase as fast as the price level.
• D) Inflation increases the value of peoples' saving and encourages overspending on goods and services.

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Definitions:

Halo Effect

is a cognitive bias where the perception of one positive trait leads to the unjustified favorable evaluation of other unrelated traits.

Overweighing

The tendency to give disproportionately heavy weight to a specific fact or piece of information when making decisions or assessments.

Negative Information

Data or feedback that reflects unfavorably on a person, situation, or entity, often resulting in adverse perceptions or outcomes.

Interviewer

An individual who conducts job interviews, typically asking questions to evaluate an applicant's suitability for a position.