If You Expect That the Inflation Rate Is 5 Percent

question 104

Multiple Choice

If you expect that the inflation rate is 5 percent and the actual inflation rate turned out to be exactly 5 percent, then:

• A) lenders gain.
• B) borrowers gain.
• C) both the borrowers and lenders gain.
• D) neither borrowers nor lenders gain.

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Definitions:

Fixed Cost

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, which are incurred regardless of the quantity produced.

Patent

A legal right granted by a government to an inventor, giving the holder exclusive rights to use, sell, and manufacture the invention for a certain period of time.

Zero Marginal Cost

A situation where producing one additional unit of a good or service does not increase the total cost of production.

Fixed Cost

Fixed costs are business expenses that remain constant regardless of the level of production or sales, such as rent or salaries.