When Persistent Inflation Is Present, We Would Expect

question 151

Multiple Choice

When persistent inflation is present, we would expect

• A) borrowers to systematically gain at the expense of lenders.
• B) lenders to systematically gain at the expense of borrowers.
• C) nominal interest rates to be higher than would be true if prices were stable.
• D) nominal interest rates to be lower than real interest rates.

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Definitions:

DADA Syndrome

Four stages—denial, anger, depression, and acceptance—experienced by individuals when they are faced with unwanted change.

Denial

A psychological defense mechanism wherein an individual refuses to accept reality or facts.

Anger

A strong feeling of annoyance, displeasure, or hostility.

Lewin's Force Field Analysis

A conceptual framework for analyzing the factors (forces) that influence a situation, identifying those that support a particular goal (driving forces) and those that oppose it (restraining forces).