What is an advantage of mild inﬂation according to some economists?
A) It helps to close the GDP gap.
B) It reduces the inﬂation premium.
C) It makes it easier for ﬁrms to adjust real wages downward as demand for their products falls.
D) It reduces frictional, structural, and cyclical unemployment in the economy to make the economy more productive.

Question

Quizplus · Accepted Answer

According to some economists, mild inflation makes it easier for firms to adjust real wages downward as demand for their products falls. This helps to prevent job losses and maintain employment levels, ultimately contributing to a more stable economy.

What Is an Advantage of Mild Inﬂation According to Some