Why are creditors harmed by unexpected inflation?
a. Creditors receive lower nominal rates of interest when prices rise
b. Creditors are paid back with more valuable dollars.
c. Creditors receive higher nominal rates of interest when prices rise.
d. Creditors are paid back money with less spending power than they expected when the money was loaned out.
d
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If a university charged a lower price for tuition during summer school than during the regular session, in search of added total revenue,
a. administrators likely believe that demand is more elastic during summer school than during the regular session. b. administrators likely believe that demand is less elastic during summer school than during the regular session. c. it indicates nothing about likely differences in the elasticity of demand during summer school than during the regular session. d. administrators likely believe that demand is both lower and less elastic during summer school than during the regular session.
A tax on wages will
a. reduce labor supply since leisure becomes cheaper. b. raise labor supply since income is reduced. c. have an unpredictable impact on labor supply since there are both substitution and income effects. d. have a predictable impact since economists know substitution effects will dominate.
Government action will often result in the counterproductive use of resources because
What will be an ideal response?
An increase in planned investment will shift the _____
Fill in the blank(s) with the appropriate word(s).