How would a permanent reduction in inflation impact menu costs and unemployment?
A) It would permanently reduce menu costs and permanently lower unemployment.
B) It would permanently reduce menu costs and temporarily raise unemployment.
C) It would temporarily reduce menu costs and temporarily lower unemployment.
D) It would temporarily reduce menu costs and temporarily raise unemployment.

Question

Quizplus · Accepted Answer

A permanent reduction in inflation would reduce menu costs as businesses would not have to constantly adjust prices to keep up with rising inflation. However, it may initially raise unemployment as the decrease in inflation could cause a decrease in demand for goods and services, leading to layoffs and decreased hiring. This effect would likely only be temporary as the economy adjusts to the new inflation rate.

How Would a Permanent Reduction in Inflation Impact Menu Costs