Final answer:
Cold turkey and gradualism are two strategies for reducing expected inflation, with the former involving abrupt monetary policy adjustments and the latter implementing gradualist measures. Both aim to control inflation without causing significant economic disruptions.
Step-by-step explanation:
The question "Name two strategies for reducing expected inflation" pertains to economic policies. Answer C, which includes both cold turkey and gradualism, is the correct option. The cold turkey approach refers to a sharp and immediate tightening of monetary policy to bring down inflation quickly, despite potential short-term economic pain. Gradualism, on the other hand, involves a slow and steady tightening of monetary policy to reduce inflation gently over time, with the goal of minimizing the adverse impact on employment and output. Both strategies are valid and have been used by different economies to tackle inflation.
Monetary policy is a key tool in preventing entrenched inflation. High-income economies leverage its potential to maintain low inflation, thus avoiding the undesirable risks associated with high inflation, such as distractions for businesses from innovating and serving customers. While Keynesians may see a trade-off between inflation and unemployment, neoclassical economists disagree, suggesting that long-term economic stability requires keeping inflation in check.