A permanent reduction in inflation would
A)permanently reduce menu costs and permanently lower unemployment.
B)permanently reduce menu costs and temporarily raise unemployment.
C)temporarily reduce menu costs and temporarily lower unemployment.
D)temporarily reduce menu costs and temporarily raise unemployment.

Question

Quizplus · Accepted Answer

A permanent reduction in inflation reduces menu costs permanently, as businesses adjust prices less frequently. However, it can temporarily raise unemployment due to short-term economic adjustments and wage rigidity.

A Permanent Reduction in Inflation Would