The costs of disinflation would be low if
A)expected inflation falls as inflation falls.
B)wage and price controls were used.
C)the Phillips curve were nearly horizontal.
D)the Phillips curve adjusted slowly to changes in inflation.

Question

Quizplus · Accepted Answer

If expected inflation falls as inflation falls, then individuals and firms are less likely to resist disinflationary policies. This would make the costs of disinflation lower compared to situations where expected inflation remains high or even increases.

The Costs of Disinflation Would Be Low If