Recovery from a recession can be expected to be quicker
A) the more sensitive inflation is to economic conditions.
B) the more heavily recent inflationary experiences are incorporated into the computation of inflationary expectations.
C) the more responsive interest rates are to changes in inflation.
D) all of the above.
E) none of the above.

Question

Quizplus · Accepted Answer

Recovery from a recession can be quicker when inflation is sensitive to economic conditions, recent inflationary experiences significantly influence inflationary expectations, and interest rates are responsive to changes in inflation. These factors can help stabilize the economy by adjusting inflation expectations and making monetary policy more effective.

Recovery from a Recession Can Be Expected to Be Quicker