Most contracts, wage levels, and interest rates are either indexed to inflation, or involve using the currency of another country to sidestep the problem of inflation in some converging economies. Following these policies caused
A. the net flow of foreign investment in and out of the economy reached zero
B. solid levels of economic growth for sustained periods of time with 10-30% inflation
C. a moderate but substantial current account trade imbalance to control inflation
D. indexed inflation policy trade-offs that led to substantial restrictions on trade
Answer:B
Most contracts, wage levels, and interest rates are either indexed to inflation, or involve using the currency of another country to sidestep the problem of inflation in some converging economies. Following these policies caused
A. the net flow of foreign investment in and out of the economy reached zero B. solid levels of economic growth for sustained periods of time with 10-30% inflation C. a moderate but substantial current account trade imbalance to control inflation D. indexed inflation policy trade-offs that led to substantial restrictions on trade
Explanation: Type: Multiple Choice