If Expected Inflation in a Period Exceeds Actual Inflation

question 6

Multiple Choice

If expected inflation in a period exceeds actual inflation

• A) borrowers will benefit.
• B) savers will lose purchasing power.
• C) SSUs will benefit at the expense of DSUs.
• D) interest rates are likely to increase in the future.

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Definitions:

Norms

Informal understandings that govern the behaviors of members of a society, guiding what actions are considered acceptable or not.

Cognitive Dissonance

The mental unease felt when possessing two or more contradictory beliefs, values, or attitudes.

Planned Behavior

A theory that predicts an individual's intention to engage in a behavior at a specific time and place.

Scientific Process

A systematic methodology involving observation, experimentation, and analysis to acquire knowledge and understand phenomena.