Inflation inertia is the tendency for inflation to:
A)equal zero.
B)change relatively slowly from year to year.
C)decrease when the Fed increases interest rates.
D)increase when the Fed decreases interest rates.

Question

Quizplus · Accepted Answer

Many economists have noted that inflation seems to be inertial, in the sense that it tends to remain roughly constant as long as the economy is at potential output and there are no external shocks to the price level. This phenomenon is known as "inflation inertia."

Inflation Inertia Is the Tendency for Inflation To