The negative correlation that occurs between inflation and economic growth can best be explained by
A)inflation increasing uncertainty.
B)inflation decreasing uncertainty.
C)inflation making everything cheaper.
D)inflation making everything too expensive.
E)None of these

Question

Quizplus · Accepted Answer

Inflation increases uncertainty as it becomes difficult for businesses to plan for the future as the cost of goods and services constantly increase. This uncertainty can lead to a decrease in investment and consumer spending which can result in a decrease in economic growth.

The Negative Correlation That Occurs Between Inflation and Economic Growth