Some Countries Have Had High Inflation for a Long Time

question 30

Multiple Choice

Some countries have had high inflation for a long time.Others have had low or moderate inflation for a long time.Which of the following,at least in theory,could explain why some countries would continue to have high inflation?

• A)High inflation countries have relatively small sacrifice ratios and so see no need to reduce inflation.
• B)Inflation reduction works best when it is unexpected,and people in high inflation countries would quickly anticipate any change in monetary policy.
• C)In a country where inflation has been high for a long time,people are likely to have found ways to limit the costs.
• D)In a country where inflation has been high for a long time,there are no costs to the inflation.

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Definitions:

Central Limit Theorem

A statistical theory that states the distribution of sample means approximates a normal distribution as the sample size becomes large, regardless of the population's distribution.

Sampling Distribution

The sampling distribution is a probability distribution of a statistic obtained through a large number of samples drawn from a specific population.

Modality

Value or values of a variable that have the highest frequency in a set of data.

Directional Hypothesis

A specific type of hypothesis that stipulates the direction of the expected relationship between variables (e.g., 'greater than', 'less than').