Increases in productivity result in:
A) higher inflation as output increases.
B) lower inflation as output decreases.
C) opportunities for policymakers to reduce their inflation target without inducing a recession.
D) none of the answers provided is correct.

Question

Quizplus · Accepted Answer

Increases in productivity allow for more output with the same input, which can reduce costs and prices, potentially allowing policymakers to aim for lower inflation targets without the negative impact of reducing economic activity, thus avoiding a recession.

Increases in Productivity Result In