Inflation redistributes income from people who do not raise their prices to people who do raise their prices.
Answer the following statement true (T) or false (F)
True
An example is the lender who lends money but then experiences unexpected inflation. The rate of return on the loan is lower than desired and the borrower can repay the loan with dollars that are worth less than before.
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Inflation is best described as a situation in which
A) relative prices are changing. B) some prices are rising faster than others. C) relative prices are changing, but the purchasing power of the dollar is unchanged. D) the average of all prices are on a sustained rise over a period of time.
People learn to hold a specific quantity of money for the groceries, theater tickets, gasoline, clothes, film, and other items they habitually purchase. This behavior is representative of the:
a. precautionary demand. b. speculative demand. c. transactions demand. d. volatility demand. e. liquidity demand.
The CPI but not the GDP deflator takes into account
a. The prices of imports that consumers buy b. Investment goods bought by businesses c. Goods bought by the government d. None of the above
During the decade of the 1980s, the size of the national debt of the United States was cut in half
Indicate whether the statement is true or false