A Current High Rate of Inflation Will Tend to Promote

question 56

Multiple Choice

A current high rate of inflation will tend to promote a

• A) low expected inflation and a low rate of actual inflation.
• B) moderate expected inflation and a moderate rate of actual inflation.
• C) high expected inflation and a high rate of actual inflation.
• D) low expected inflation and a high rate of actual inflation.
• E) built-in expectation of low inflation in the futurE.

---

Definitions:

Demand Elastic

Referring to a situation where the quantity demanded of a good or service significantly changes in response to a change in its price.

Price-Elasticity Coefficient

A numeric value that measures how much the quantity demanded of a good responds to a change in the price of that good, indicative of its price sensitivity.

Price Reduction

A decrease in the selling price of goods or services, often intended to stimulate demand or respond to competitive market pressures.

Price Elasticity

The measure of how responsive the quantity demanded or supplied of a good or service is to a change in its price.