If the economy has been experiencing high inflation,as it was in the late 1970s,sharply reducing that inflation rate through monetary policy (as Paul Volcker did)is likely to
A) increase short-run economic growth, triggering an economic expansion.
B) produce a recession in the short run.
C) increase demand for expensive items like cars and houses.
D) reduce the unemployment rate in the short run.

Question

Quizplus · Accepted Answer

Cutting the inflation rate will slow the economy, possibly creating a recession.

If the Economy Has Been Experiencing High Inflation,as It Was