If inflation is positive and is perfectly anticipated
A) those that borrow money lose.
B) those that lend money lose.
C) those that hold paper money lose.
D) no one in the economy loses.
Answer: C
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If the price of a good rises and the consumer's budget remains the same, what happens to the consumer's consumption possibilities?
What will be an ideal response?
According to the Fisher effect, an increase in expected inflation results in:
A) lower nominal interest rates B) higher nominal interest rates C) lower real interest rates D) higher real interest rates
Based on the graph showing a reduction in the growth of the money supply, if the economy maintains a 3 percent inflation rate for a fairly long time, people’s expectations will adjust and move the economy from ______.
a. point E to point D
b. point E to point F
c. point F to point D
d. point F to point E
National defense is an example of an externality.
Answer the following statement true (T) or false (F)