A circle of low expected inflation leads to ____ increases in wages and costs and to ____ actual inflation.
A) large; high
B) large; low
C) small; low
D) small; high

Question

Quizplus · Accepted Answer

A circle of low expected inflation means that workers and businesses expect low inflation in the future. This leads to small increases in wages and costs because there is less pressure to raise prices. As a result, actual inflation is also low.

A Circle of Low Expected Inflation Leads to ____ Increases