Which of the following is a danger of high rates of inflation?
A) Price changes encourage long-term contracts at the expense of short-term contracts.
B) Rapid price changes reduce uncertainty.
C) Inflation increases the real value of assets, such as stocks and bonds.
D) Inflation will encourage people to spend less time producing and more time trying to protect the value of their assets.

Question

Quizplus · Accepted Answer

High rates of inflation can create uncertainty and erode the value of people's assets, prompting them to focus on protecting their wealth instead of producing goods and services. This phenomenon is known as the "store of value" function of money, which can lead to a decrease in overall economic output and productivity.

Which of the Following Is a Danger of High Rates