Some countries have had high inflation for a long time.Others have had low or moderate inflation for a long time.Which of the following,at least in theory,could explain why some countries would continue to have high inflation?
A)High inflation countries have relatively small sacrifice ratios and so see no need to reduce inflation.
B)Inflation reduction works best when it is unexpected,and people in high inflation countries would quickly anticipate any change in monetary policy.
C)In a country where inflation has been high for a long time,people are likely to have found ways to limit the costs.
D)In a country where inflation has been high for a long time,there are no costs to the inflation.

Question

Quizplus · Accepted Answer

People in high inflation countries may have found ways to limit the costs of inflation, such as inflation-indexed contracts or holding assets that appreciate faster than inflation. This means that there may be less pressure on policymakers to reduce inflation, as the costs are perceived to be lower.

Some Countries Have Had High Inflation for a Long Time