Inflation this year caused by a rise in inflation last year is

Question

Quizplus · Accepted Answer

Expectations-generated inflation occurs when the anticipation of inflation in the future causes people to adjust their behavior in ways that contribute to inflation today. If inflation was high last year, it might lead to the expectation that it will continue to be high, causing behaviors (like demanding higher wages or increasing prices) that actually drive inflation further.

Inflation This Year Caused by a Rise in Inflation Last