When the actual inflation rate turns out to be greater than the expected inflation rate, who gains—the borrower or the lender—and who loses? Explain why
What will be an ideal response?
The borrower gains because he pays back the loan in cheaper dollars—dollars that have lost more purchasing power than was expected. The lender loses because she receives dollars that have lost more purchasing power than was expected.
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Exponential growth implies that:
A) relatively large differences in growth rates will translate into small differences in the level of a quantity after many years of growing. B) growth rates will alternate between positive and negative values in every consecutive time period. C) relatively small differences in growth rates translates into large differences in the level of a quantity after many years of growing. D) growth rates can only be positive.
In the long run, the Fed may decrease the unemployment rate only if it is willing to increase the rate of inflation
Indicate whether the statement is true or false
The demand for money will be high in an economy experiencing: a. a depression
b. hyperinflation. c. deflation. d. a recession. e. a sluggish population growth.
A chart of the ratio of national debt to GDP from 1915 to 2014 would show
A. significant increases from 1945 to 1975. B. significant increases during World Wars I and II. C. a larger value in 1975 compared to 1945. D. significant increases from 1995 to 2003.