Inflation - Virtuous Circle of Low Inflation

3 important questions on Inflation - Virtuous Circle of Low Inflation

Why is it referred to as a "virtuous circle"?

It describes how low inflation and low expectations keep inflation low.

What effect does a "virtuous circle" have on the economy?

It creates economic stability and makes prices easier to manage.

What can happen in a "vicious circle"?

High inflation and expectations can lead to even higher inflation.

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