Suppose There Is an Exogenous Increase in the Domestic Price

question 131

Multiple Choice

Suppose there is an exogenous increase in the domestic price level.Which of the individuals listed below would experience an increase in wealth?

• A)a person with a 25-year home mortgage
• B)a person with cash under the mattress
• C)a person with deposits in a bank savings account
• D)a person with a government bond that promises to pay the holder $1000,5 years hence
• E)a person with a corporate bond that promises to repay the face value of the bond in the future

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Definitions:

Overhead Costs

Expenses related to the day-to-day running of a business that are not directly linked to a specific product or service.

Operating Profit

Profit earned from a firm's core business operations, excluding deductions of interest and taxes.

Break-even Price

The market price that a stock or commodity must reach for an investor to recover their initial investment without any profit or loss.

Mark-up

A percentage added to the cost of goods to cover overhead and profit, determining the selling price.