Ongoing inflation has its own momentum because
A) prices rise whenever firms see other prices rising
B) the public learns to expect inflation and adjusts its decisions in response
C) public officials are unwilling to stop prosperity
D) more and more people now have jobs
E) we are always playing catch up,trying to get what we lost when others raise prices

Question

Quizplus · Accepted Answer

Ongoing inflation has its own momentum because the public learns to expect inflation and adjusts its decisions in response. Expectations of future inflation can influence wage and price-setting behavior, leading to a self-sustaining cycle of inflation. This is often referred to as "expectations-driven inflation."

Ongoing Inflation Has Its Own Momentum Because