Economists generally argue that a. costs of moderate inflation are nearly zero whereas high inflation is quite costly. b. costs of both high and moderate inflation are quite large. c. neither high inflation nor moderate inflation is very costly. d. high inflation is costly, but costs of moderate inflation are not nearly as large as the public believes .See answer

Daftar Isi

Economists generally argue that a costs of moderate inflation are nearly zero whereas high inflation is quite costly b costs of both high and moderate inflation are quite large c neither high…

Question

Super Answer

Let me help you analyze this question about economists’ views on inflation costs.

Step 1: Define Key Terms

• Moderate inflation: Generally 2-5% annual rate
• High inflation: Usually above 10% annually
• Cost refers to economic and social impact

Step 2: Analyze Each Option

a. Incorrect – Economists acknowledge that even moderate inflation has some costs
b. Incorrect – This overstates economists’ view of moderate inflation costs
c. Incorrect – This contradicts established economic research on inflation costs
d. Correct – This matches mainstream economic consensus

Step 3: Supporting Evidence

• High inflation is widely recognized as costly due to:
  • Price uncertainty
  • Menu costs
  • Resource misallocation
• Moderate inflation costs are:
  • Present but manageable
  • Less severe than public perception
  • Often offset by economic benefits

Final Answer

The correct answer is (d): high inflation is costly, but costs of moderate inflation are not nearly as large as the public believes.

This reflects the mainstream economic view that while high inflation is genuinely harmful to the economy, the public often overestimates the negative impact of moderate inflation rates.