Who is hurt and who benefits from inflation? Why?
What will be an ideal response?
Inflation hurts those on fixed incomes and those that save at fixed nominal rates of interest. Inflation benefits those who borrow at fixed nominal rates of interest and those whose wealth increases faster than the rate of inflation.
You might also like to view...
A decrease in the price level in the economy leads to
A) a leftward shift in the demand for money curve. B) a rightward shift in the demand for money curve. C) a leftward movement along the demand for money curve. D) a rightward movement along the demand for money curve.
Which of the following might be a method that the government could use to correct a negative externality?
A) an effluent fee on waste from the production of goods that create negative externalities B) government subsidies to producers of goods that create negative externalities C) financing additional production of goods that create negative externalities D) encouraging overallocation of resources of production of goods that create negative externalities
A fall in the price of a good causes an increase in its:
a. quantity demanded. b. demand. c. quantity supplied. d. supply.
Suppose workers expect the inflation rate to be 3.6 percent and they receive a nominal wage increase of 7.5 percent. If the actual inflation rate turns out to be 2.8 percent, workers will receive a lower real wage than expected
a. True b. False Indicate whether the statement is true or false