Inflation makes it difficult to distinguish relative price changes from changes in the general level of prices. Consequently, inflation ________ the efficiency of the market system.
A)increases
B)decreases
C)does not change
D)may either increase or decrease

Question

Quizplus · Accepted Answer

This may be the biggest problem with price movement: it is hard to distinguish between changes in the general price level and changes in a specific good's price.

Inflation Makes It Difficult to Distinguish Relative Price Changes from Changes