High and variable rates of inflation will
A) distort the information delivered by market prices.
B) encourage people to spend more time producing and less time trying to protect their wealth.
C) decrease the risks that accompany the undertaking of long-term investment projects.
D) promote economic growth and the efficient use of resources.

Question

Quizplus · Accepted Answer

High and variable rates of inflation can distort the information conveyed by market prices. When prices are rising quickly, it becomes difficult to distinguish between changes in relative scarcity or demand and changes in the overall level of prices. This can lead to inefficient allocation of resources and mismanagement of investment decisions.

High and Variable Rates of Inflation Will