Economists who are willing to accept mild inﬂation consider it to be a necessary by-product of high
and growing spending that produces high levels of output, full employment, and economic growth.

Question

Quizplus · Accepted Answer

This statement expresses the view of those who support the Phillips curve theory, which posits a trade-off between inflation and unemployment. They argue that a moderate level of inflation can spur economic growth by stimulating demand and lowering real wages. However, this view is not universally accepted among economists, and some believe that high inflation can have harmful effects on the economy, such as reducing purchasing power and discouraging savings and investment.

Economists Who Are Willing to Accept Mild Inﬂation Consider It