Question

Typically, high inflation is a sign of

a. a healthy economy because it results from a fall in production costs.

b. a healthy economy because it results from a rise in consumer interest.

c. a struggling economy because wages cannot keep up with the increase in prices.

d. a struggling economy because it results from a fall in consumer interest.

Answer 1

the correct answer is c

Answer 2

The correct answer is C. a struggling economy because wages cannot keep up with the increase in prices. In an economy inflation is healthy, but only when low, because when it is low it is steady and predictable, so A and B won't work. Now only C and D are left. Why we know it is C is because when there is high inflation, it is generally a result of overprinting money or other big faults, and people get paid less in comparison to prices. Therefore, it must be C.