High Volatility in the Inflation Rate Can Result In

question 136

Multiple Choice

High volatility in the inflation rate can result in:

• A) improper allocation of resources.
• B) sudden changes in output.
• C) low volatility in the CPI.
• D) deflation.

---

Definitions:

Engel Curve

Curve relating the quantity of a good consumed to income.

Quantity Consumed

The total amount of a good or service that is used or purchased by consumers within a particular period of time.

Downward-Sloping

Describes a line or curve on a graph that shows a decrease in one variable in response to an increase in another.

Price-Consumption Curve

A curve that shows how a consumer's optimal choices change as the price of a good changes, holding income and other prices constant.