High and Unexpected Inflation Has a Greater Cost

question 22

Multiple Choice

High and unexpected inflation has a greater cost

• A)for those who save than for those who borrow.
• B)for those who hold a little money than for those who hold a lot of money.
• C)for those whose wages increase by as much as inflation than those who are paid a fixed nominal wage.
• D)for savers in low income tax brackets than for savers in high income tax brackets.

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Definitions:

U.S. Prices

A general term referring to the level of prices or cost of living in the United States, often assessed through indicators like the Consumer Price Index.

Vertical Axis

In a graph or chart, the y-axis along which numerical values are plotted to measure the outcome variable.

Price Level

The current mean cost of goods and services across the full economic production.

Money Demand

The desired holding of financial assets in the form of money, which varies inversely with the interest rate.