During a period of persistent inflation,
a. borrowers will systematically gain at the expense of lenders.
b. nominal interest rates will rise and eventually reflect the expected rate of inflation.
c. once borrowers and lenders fully anticipate the inflation rate, there is no reason to expect that either will systematically gain relative to the other.
d. both b and c are correct.
D
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The oversimplified multiplier formula assumes that the
A. level of consumption spending is fixed. B. price level is fixed. C. government spending is fixed. D. net exports depend on income.
An increase in the value of the U.S. dollar will
A) increase Canadian demand for winter homes in Florida. B) increase the cost of homes in Florida for American buyers. C) reduce Canadian demand for winter homes in Florida. D) reduce the cost of homes in Florida for Canadian buyers.
Laser disc players have been around for 10 years, but in the last several years, the sales have skyrocketed
Manufacturers attribute the increase in sales to lower prices, increased availability of movies on laser disk, and the appearance of laser disks for rent in video cassette rental stores. Describe this market using the concept of network externalities.
Which of the following did classical economists believe caused depressions and high unemployment?
a. Sticky product prices b. Tax increases c. Business expectations d. Sticky wages e. Sticky interest rates