A reduction in the inflation rate would make relative prices
A)less variable,making it more likely that resources will be allocated to their best use.
B)less variable,making it less likely that resources will be allocated to their best use.
C)more variable,making it more likely that resources will be allocated to their best use.
D)more variable,making it less likely that resources will be allocated to their best use.

Question

Quizplus · Accepted Answer

A reduction in inflation rate means that prices will become less variable, which in turn makes it more likely that resources will be allocated to their best use. This is because with less variability in prices, firms and consumers can make more informed decisions about what goods and services to produce and consume, which ultimately leads to a more efficient allocation of resources.

A Reduction in the Inflation Rate Would Make Relative Prices