Which Statement Best Describes How the Cost of Unexpected Inflation

question 14

Multiple Choice

Which statement best describes how the cost of unexpected inflation is distributed?

• A) Unexpected inflation has a greater cost for those who borrow than those who save.
• B) Unexpected inflation has a greater cost for those who hold a little money than for those who hold a lot of money.
• C) Unexpected inflation has a greater cost for those whose wages increase by as much as inflation than those who are paid a fixed nominal wage.
• D) Unexpected inflation has a greater cost for savers in high income tax brackets than for savers in low income tax brackets.

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Definitions:

Knowledge Sharing

The process by which individuals exchange information, skills, or expertise in a way that benefits the organization or community.

Measures Performance

The process of evaluating the efficiency and effectiveness of actions or operations, typically through quantitative metrics.

Flexible Budget

A budget that is stated as a function of some volume measure, such as units produced. Flexible budgets adjust for changes in volume.

Master Budget

A document that integrates all the estimates from the different departments to establish guidelines and benchmarks for the whole organization.