Suppose policymakers are faced with ending a sustained inflation. They must weigh the future benefits of
Against the immediate costs of .

Question

Quizplus · Accepted Answer

To end sustained inflation, policymakers may consider implementing contractionary monetary policies such as raising interest rates or reducing the money supply. However, these policies may lead to reduced output and higher unemployment in the short term. The benefits of lower inflation in the long term may outweigh the costs of reduced output and higher unemployment in the short term. Therefore, choice D is the best option.

Suppose Policymakers Are Faced with Ending a Sustained Inflation