Is everyone worse off because of inflation? Why or why not?
What will be an ideal response?
No. During inflation some people are better off and some people are worse off. Inflation does not affect everyone equally because people buy and sell different combinations of goods and assets. Inflation redistributes income and wealth by altering relative prices.
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A country gains more from international trade the more its terms of trade differ from its autarky price
Indicate whether the statement is true or false
Suppose the real money demand function is Md/P = 2400 + 0.2Y - 10,000 (r + ?e). Assume M = 4000, P = 2.0, ?e = .03, and Y = 5000. The real interest rate that clears the asset market is
A) 3%. B) 6%. C) 11%. D) 14%.
In the long run inflation is explained by __________. For countries that had hyperinflation this source of inflation arose primarily because the government __________
Fill in the blank(s) with correct word
When the money market is drawn with the value of money on the vertical axis, an increase in the price level causes a
a. shift to the right of the money demand curve. b. shift to the left of the money demand curve. c. movement to the left along the money demand curve. d. movement to the right along the money demand curve.