Someone says to you: “Inflation benefits the rich and hurts the poor” and asks for your assessment as an economist. What would be your response?
What will be an ideal response?
Inflation is not a benefit for society and does not necessarily benefit the rich. The re distributive effects of inflation on the rich and the poor are arbitrary. Unanticipated inflation benefits some people in society, such as debtors, and hurts others, such as fixed-nominal-income receivers, savers, and creditors. The rich are often found in these latter groups who are hurt by unanticipated inflation.
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An assumption of neoclassical growth theory is that
A) technological change is random. B) technological change can be influenced by savings. C) more growth encourages more technological change. D) None of the above answers is correct.
Refer to Figure 12-10. The total cost at the profit-maximizing output level equals
A) $4,800. B) $3,300. C) $2,500. D) $1,800.
The primary purpose of measuring the overall level of prices in the economy is to
a. allow for the measurement of GDP. b. allow consumers to know what kinds of prices to expect in the future. c. allow for the comparison of dollar figures from different points in time. d. allow for the comparison of dollar figures from the same point in time.
As the tax rate increases, the government spending multiplier
A. could either increase or decrease depending on the value of the MPC. B. increases. C. does not change. D. decreases.