One effect of an unexpected rise in inflation is that wealth is redistributed from:
A. borrowers to lenders.
B. lenders to borrowers.
C. young people to old people.
D. government to firms.
Ans: B. lenders to borrowers.
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If a firm is producing an output level at which marginal revenue exceeds marginal cost in the short run, the firm will increase profits by reducing its output level
a. True b. False Indicate whether the statement is true or false
An example of a good that can be used for money that has intrinsic value is:
A. cigarettes. B. fish. C. gold. D. All of these have intrinsic value.
If inflation is higher than expected, then lenders receive interest payments whose real values are less than they expected
a. True b. False Indicate whether the statement is true or false
Suppose a consumer spends his income on CDs and DVDs. If his income decreases, the budget constraint for CDs and DVDs will
a. shift outward, parallel to the original budget constraint. b. shift inward, parallel to the original budget constraint. c. rotate outward along the CD axis because he can afford more CDs. d. rotate outward along the DVD axis because he can afford more DVDs.