Question

A permanent reduction in inflation would a. permanently reduce the frequency of price changes and permanently lower unemployment. b. permanently reduce the frequency of price changes and temporarily raise unemployment. c. temporarily reduce the frequency of price changes and temporarily lower unemployment. d. temporarily reduce the frequency of price changes and temporarily raise unemployment.

Answer 1

Answer:

b. permanently reduce the frequency of price changes and temporarily raise unemployment.

Explanation:

In the field of economics, the term 'inflation' may be defined as the rise in the price of an economy for a period of time. When the price level rises or increases, fewer goods can be purchased by each unit of currency. The price of the products increases in the market.

It also affects in the rate of unemployment. But when the inflation is reduce it can temporarily rise the rate of unemployment but it permanently reduces the frequency of the price changes in the economy.