When the inflation rate of a country is high over a lengthy time period,
A) the year-to-year variability in the rate of inflation is generally small.
B) the year-to-year variability in the rate of inflation is generally large.
C) decision makers will be able to forecast future rates of inflation accurately.
D) there is no reason to believe that the inflation will exert harmful side effects on real output and the prosperity of the country.

Question

Quizplus · Accepted Answer

When the inflation rate of a country is high over a lengthy time period, the year-to-year variability in the rate of inflation is generally large. This makes it difficult for decision makers to accurately forecast future rates of inflation, and the inflation can exert harmful side effects on real output and the prosperity of the country.

When the Inflation Rate of a Country Is High Over