The Costs of Disinflation Would Be Low If

question 36

Multiple Choice

The costs of disinflation would be low if

• A)expected inflation falls as inflation falls.
• B)wage and price controls were used.
• C)the Phillips curve were nearly horizontal.
• D)the Phillips curve adjusted slowly to changes in inflation.

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Definitions:

Inverse Supply

A concept in economics that describes the relationship between the price of a good and the quantity supplied by producers, typically showing that as price decreases, the quantity supplied decreases.

Tax

Compulsory contributions to state revenue, levied by the government on workers' income, business profits, or added to the cost of some goods, services, and transactions.

Supply Curve

A graph representing the relationship between the price of a good or service and the quantity of it that producers are willing to supply.

Equilibrium Price

The market price at which the quantity of a good demanded equals the quantity supplied, leading to market stability.