Which one of the following would benefit financially from unanticipated inflation?
A. a borrower with an adjustable rate mortgage
B. a bank that has made loans at a fixed nominal interest rate
C. a firm whose workers are covered by a COLA agreement
D. a borrower whose loan has a fixed nominal interest rate
Answer: D
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A normal good is defined as a good
A) for which demand increases when income increases. B) with a downward sloping demand curve. C) for which demand increases when the number of demanders increases. D) for which demand increases when the price of a substitute rises. E) for which demand increases when the price of a complement falls.
The law of diminishing marginal returns states that
A) as both labor and capital are increased, output increases at a decreasing rate. B) output increases at a decreasing rate as more capital is added. C) output decreases at a constant rate as more capital is added. D) as both labor and capital are increased, output does not change. E) output increases at a constant rate as more capital is added.
Which of the following attributes of fiscal policy will most likely be stressed by a proponent of supply-side economics?
a. the impact of budget deficits on interest rates and aggregate demand b. the impact of government spending on aggregate demand, output, and employment c. the impact of marginal tax rates on the supply and productivity of resources d. the impact of budget deficits on the rate of taxation in the future
In 1870, the richest country in the world was
a. Germany. b. Japan c. the United Kingdom. d. the United States.