Economists
A)agree that the costs of reducing inflation to zero are worth the benefits. The increase in unemployment from reducing inflation will be smaller if inflation expectations remain high.
B)agree that the costs of reducing inflation to zero are worth the benefits. The increase in unemployment from reducing inflation will be larger if inflation expectations remain high.
C)disagree about whether the costs of reducing inflation to zero are worth the benefits. The increase in unemployment from reducing inflation will be smaller if inflation expectations remain high.
D)disagree about whether the costs of reducing inflation to zero are worth the benefits. The increase in unemployment from reducing inflation will be larger if inflation expectations remain high.

Question

Quizplus · Accepted Answer

Economists disagree about the costs and benefits of reducing inflation to zero. If inflation expectations remain high, the increase in unemployment from reducing inflation is likely to be larger, as people and businesses may not adjust their behavior quickly.