Which of the following is likely to be an effect of inflation?
a. An increase in the willingness of lenders to lend money for longer periods
b. A decrease in the willingness of borrowers to borrow money for longer periods
c. A decrease in the purchasing power of lenders in the economy
d. An increase in the willingness of people to buy bonds as a hedge against rising prices
e. An increase in the willingness of people to buy physical assets as a hedge against rising prices
c
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Everything else held constant, in the market for reserves, when the federal funds rate is 3%, increasing the interest rate paid on excess reserves from 1% to 2%
A) lowers the federal funds rate. B) raises the federal funds rate. C) has no effect on the federal funds rate. D) has an indeterminate effect on the federal funds rate.
In high inflation countries, inflation rates can exceed the rate of growth of money because:
A. money loses value quickly with inflation. B. high inflation increases the velocity of money. C. high rates of inflation increase the opportunity cost of holding money. D. all of the answers given are correct.
In competitive markets, the marginal revenue product curve and marginal physical product curve have similar shapes because
A. The law of diminishing marginal utility and the law of diminishing returns imply a downward-sloping demand curve in the product market. B. The demand curve for labor is the same for both the individual firm and the market as a whole. C. The demand curve for the product slopes downward in accordance with the law of diminishing returns. D. MRP = P × MPP.
The Clear Plastic Company's plant discharges large quantities of toxic chemicals into some groundwater sources. Residents in the surrounding area have higher medical bills because of Clear Plastic's pollution. These additional medical costs represent
A. the company's private costs. B. the neighboring families' external costs. C. a positive externality. D. a negative externality.