124k views
4 votes
During periods when the inflation rate fluctuates widely,

a. all relative prices increase at the same rate, leaving money prices constant
b. economic efficiency increases because decision makers pay closer attention to changes in money prices
c. uncertainty about changes in relative prices causes a decrease in economic efficiency
d. all money prices increase at the same rate, leaving relative prices constant

User Aventurin
by
5.0k points

1 Answer

4 votes

Answer: During periods when the inflation rate fluctuates widely, "c. uncertainty about changes in relative prices causes a decrease in economic efficiency".

Explanation: Economic process caused by the imbalance between production and demand; it causes a continuous rise in the prices of most of the products and services, and a loss of the value of the money to be able to acquire them or make use of them. The uncertainty in prices caused by inflation also negatively affects consumers, since they must waste time researching the price of the products they consume. So this uncertainty and less information, which produces inflation, negatively affects both investors and consumers, and with this negatively affects the growth possibilities of the economy.

User Duong
by
5.3k points