Which one of the following groups benefits from inflation?
a. Landlords
b. Borrowers
c. Savers
d. Lenders
b
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Income elasticity of demand reflects
A) the change in total quantity demanded divided by the total change in income. B) the responsiveness of the quantity demanded to changes in income, adjusting its relative price so real income does not change. C) the responsiveness of income of producers to a change in quantity sold of the good. D) the responsiveness of demand to changes in income.
Ms. Jones is a professor at a university. She strongly supports the rational expectations theory. She is likely to believe that the only time active policy has an impact on aggregate output is when: a. an expansionary policy is implemented. b. a recessionary policy is implemented. c. policy changes are unannounced
d. the economy has a recessionary gap. e. the economy has an expansionary gap.
Which of the following is an example of an automatic stabilizer?
A. Congress legislates lower tax rates to increase consumption and investment. B. Tax rates are increased during a recession to maintain a balanced budget. C. A regressive income tax system reduces tax revenues (as a share of income) as income expands. D. Revenues from the corporate income tax increase sharply during a business boom but decline substantially during a recession, even though no new tax legislation has been enacted.
Suppose Duracell, an American firm, produces car batteries and sells the batteries for $100 to retailers in the USA, but sells them 20% cheaper to Australia retailers. In this scenario, Duracell is guilty of:
A. dumping in Australia. B. imposing taxes. C. benevolence to Australians. D. fraud.