Question

Activists regard the self-correcting mechanism, which works through wage and price adjustment, as very slow and hence feel that the government should pursue active, accommodating policy to address high unemployment when it develops. Nonactivists, by contrast, believe that the self-correcting mechanism works quickly and therefore advocate that the government should avoid the implementation of active policies aimed at eliminating unemployment.

Short answer

The stated assertion is false, according to the text.

Step-by-step solution

Step 1. Concept of Inflation

Inflation is defined as a steady increase in the prices of goods and services within a given economy over a given period of time.

Step 2. Explanation

The assertion is untrue because the central bank is a self-governing organization that has the authority to intervene in the economy to restore stability. This issue can be easily dealt with by implementing a stabilization strategy that can easily control both inflation and output in the economy.