According to the article “As the Global Economy Picks Up, Inflation Is Oddly Quiescent
Links to an external site.
,” why were economists expecting inflation to pick up in 2017?

Question

BlackTom AI · Accepted Answer

To understand why economists expected inflation to pick up in 2017 according to the article, we need to evaluate the potential drivers listed.
Option 1: Rise in import prices. When the prices of goods imported from abroad increase, domestic consumers and businesses often face higher costs. This can feed into overall price levels as firms pass along higher input costs or consumers shift to more expensive goods, contributing to inflationary pressure.
Option 2: Increased inflation expectations. If households and firms expect prices to rise in the future, they may adjust their behavior — workers demanding higher wages and firms pre-emptively raising prices — which can become a self-fulfilling inflationary cycle. Expectations can anchor actual inflation, influencing wage-setting and pricing.
Option 3: Tightening of the labor market. A lean labor market typically means lower unemployment and rising wages. Higher wages increase household purchasing power and can raise costs for businesses, which may raise prices to maintain margins, contributing to inflationary dynamics.
Option 4: All of the above. Since each of the three factors above can independently push inflation higher, their combined presence would reasonably lead economists to anticipate an uptick in inflation in 2017. The interplay among import prices, expectations, and labor-market conditions provides a multi-faceted rationale for inflation to move upward.
In sum, recognizing multiple inflation channels—import costs, expectations, and wage-driven demand pressures—helps explain why the article would signal an expected inflation uptick, aligning with the choice that aggregates all these factors.

2025Fall-ECN3615-01 Final Exam Practice Quiz

According to the article “As the Global Economy Picks Up, Inflation Is Oddly Quiescent Links to an external site. ,” why were economists expecting inflation to pick up in 2017?

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