It is difficult to eliminate a constant inflation.A major reason it is so difficult is that inflationary expectations

Question

Quizplus · Accepted Answer

Inflationary expectations keep shifting the AS curve upward, making it difficult to eliminate constant inflation. This means that even when the economy is operating at its potential output, prices will continue to rise, leading to inflation. Monetary policy tools such as the increase in interest rates or decrease in money supply can slow down the rate of inflation by reducing aggregate expenditure, but it cannot completely eliminate inflationary expectations. Therefore, the answer is C.

It Is Difficult to Eliminate a Constant Inflation