When Inflation Causes Relative-Price Variability

question 63

Multiple Choice

When inflation causes relative-price variability,

• A)consumer decisions are distorted and the ability of markets to efficiently allocate factors of production is impaired.
• B)consumer decisions are distorted,but markets are still able to efficiently allocate factors of production.
• C)consumer decisions are not distorted,but the ability of markets to efficiently allocate factors of production is impaired.
• D)consumer decisions are not distorted and markets are still able to efficiently allocate factors of production.

---

Definitions:

Fe2+

Ferrous ion, a form of the iron ion where iron has a valency of +2, commonly involved in redox reactions and an essential part of hemoglobin.

Oxygen

A chemical element with symbol O and atomic number 8, essential for respiration of living organisms and combustion processes.

Compound

A compound is a substance made up of two or more different elements chemically bonded together in a fixed ratio.

Ag+

A silver ion, typically carrying a single positive charge, often used in silver compounds or in photography.