Which of the following about inflation is true?
A) High rates of inflation are usually associated with wide year-to-year changes in inflation.
B) High rates of inflation are usually associated only with very large countries such as the United States.
C) High rates of inflation are usually associated only with smaller countries such as Costa Rica.
D) High rates of inflation will generally improve the economic efficiency of an economy.

Question

Quizplus · Accepted Answer

High rates of inflation are usually associated with wide year-to-year changes in inflation. This is because once inflation starts to increase, it can become difficult to control and can lead to further increases. This creates a cycle of inflation, causing wide fluctuations in year-to-year inflation rates. Option B and C are incorrect as high rates of inflation can occur in both large and small countries. Option D is incorrect as high rates of inflation can lead to economic inefficiency and instability.

Which of the Following About Inflation Is True