If Inflation Falls

question 17

Multiple Choice

If inflation falls,

• A)people choose to put in more effort to keep money balances low.When inflation is unexpectedly low it redistributes wealth from lenders to borrowers.
• B)people choose to put in more effort to keep money balances low.When inflation is unexpectedly low it redistributes wealth from borrowers to lenders.
• C)people choose to put in less effort to keep money balances low.When inflation is unexpectedly low it redistributes wealth from lenders to borrowers.
• D)people choose to put in less effort to keep money balances low.When inflation is unexpectedly low it redistributes wealth from borrowers to lenders.

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Definitions:

Indifferent

A state of having no preference or being neutral between two or more options as they provide the same level of utility or satisfaction.

Prizes

Awards or rewards given for a specific achievement, often used as incentives in competitions or contests.

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the amount loaned, paid to the lender at regular intervals for the use of their money.

Bond Prices

The market value of a bond, which can fluctuate based on interest rates, the bond’s credit quality, and other factors.