What is the main problem with mild inflation, according to some economists?
A)It reduces the size of the GDP gap.
B)It leads to unanticipated deflation.
C)It increases frictional and structural unemployment in the economy.
D)It diverts productive time toward activities to hedge against inflation.

Question

Quizplus · Accepted Answer

Mild inflation can lead individuals and businesses to spend time and resources on activities to protect themselves against inflation, such as adjusting prices or seeking inflation-proof investments, rather than focusing on productive economic activities.

What Is the Main Problem with Mild Inflation, According to Some