All of the Following Are True for Inflation EXCEPT

question 81

Multiple Choice

All of the following are true for inflation EXCEPT:

• A) those on a fixed income lose purchasing power during inflationary periods.
• B) creditors do not receive the full amount of a loan because the principle and interest rates are fixed.
• C) debtors are hurt during inflationary times because the amount they pay creditors back increases.
• D) increased prices due to high inflation cause consumers to spend less money.

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Definitions:

Variable Cost

Costs that change in proportion to the level of production output or activity level of an entity.

Average Variable Costs

Average variable costs represent the per-unit variable costs of production, calculated by dividing total variable costs by the quantity of output.

Average Fixed Costs

Average fixed costs refer to the fixed costs of production (costs that do not change with the level of output) divided by the quantity of output produced, which decreases as output increases.

Total Cost

The entire production cost, comprising both unchanging and variable expenditures.