If the US Dollar Were Replaced with a "New Dollar" at an at an Exchange

question 69

Multiple Choice

If the U.S. dollar were replaced with a "new dollar" at an exchange rate of 1 new dollar for 8 old dollars, then a mortgage of $100,000 would become a debt of _____ new dollars.

• A) 12,500
• B) 99,992
• C) 100,000
• D) 800,000

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Definitions:

Economic History

The study of how economic phenomena evolved in the past.

Inflation

An increase in the general price level of goods and services in an economy over a period of time.

Cost-Push Inflation

Inflation resulting from a rise in the cost of inputs such as labor, raw materials, and so forth, which subsequently reduces the availability of these goods.

Aggregate Demand Curve

A graphical representation showing the total demand for all goods and services in an economy at different price levels.