High and volatile inflation:
A) causes the price of goods and services to deviate from the market price.
B) increases the purchasing power of money and income.
C) creates high supply of goods and services.
D) destroys the ability of market prices to send signals about the value of resources and opportunities.

Question

Quizplus · Accepted Answer

High and volatile inflation destroys the ability of market prices to send signals about the value of resources and opportunities. As prices become more unpredictable, market participants become unable to make informed decisions about resource allocation and investment, leading to economic inefficiencies and distortions in the allocation of resources.

High and Volatile Inflation