If all price setters are not convinced that high inflation rates will end soon, there is:
A) price staggering
B) a transfer of wealth from one group to another
C) substantial menu costs
D) a coordination problem
E) negative real interest rates

Question

Quizplus · Accepted Answer

If all price setters are not convinced that high inflation rates will end soon, it creates a coordination problem. This means that each price setter will have their own expectations of future inflation rates and adjust their prices accordingly, making it difficult to achieve a stable inflation rate. This problem can be addressed through coordination mechanisms such as communication and agreements between price setters.

If All Price Setters Are Not Convinced That High Inflation