Economists agree:

Question

Economists agree:

Quizplus · Accepted Answer

Economists agree that inflation, especially if it is consistent year after year, creates expectations of future inflation. This is because people begin to anticipate and expect prices to continue increasing, leading to a self-fulfilling cycle of inflation. Option A is incorrect as double-digit inflation is still considered high and undesirable. Option B is also incorrect as inflation can persist if there are underlying factors such as excessive money supply growth or supply shocks. Option D is incorrect as inflation does play a role in the determination of market interest rates as investors demand higher rates to compensate for expected inflation.

Economists Agree