Joe DeRita is giving an economic briefing before the Senate Banking Committee. During his testimony, Senator Morris Howard states, "Based on the Phillips curve relationship, if we increase the inflation rate from 3% to 5% , we can achieve a reduction in the rate of unemployment in both the short run and the long run. " Senator Lawrence Fine adds, "Furthermore, if the central bank is able to credibly announce that they will maintain the money supply growth rate, so that the increased inflation rate is well anticipated, borrowers, lenders, workers, and employers will incorporate the new higher rate of inflation into long-term contracts, so there will be no adverse impact on the economy. " Should DeRita agree or disagree with the two Senators M. HowardL. Fine（）①A. Agree Agree ②B. Agree Disagree ③C. DisagreeDisagree
A. ①
B. ②
C. ③
参考答案：C
解析：
Senator Howard is incorrect. The Phillips curve suggests that in the short run a decline in unemployment would accompany an unanticipated increase in inflation, but in the long run unemployment would return to its natural rate. Senator Fine is also incorrect. Even if decision makers anticipate it, higher inflation still reduces economic growth by diverting productive activity into activities to deal with inflation and its effects, causing tax distortions (after-tax real rates fall, discouraging investment) , and increasing transactions costs because currency becomes a poorer store of value.