When Inflation Is Expected,the Real Effect on the Economy Is

question 21

Multiple Choice

When inflation is expected,the real effect on the economy is

• A) amplified.
• B) positive.
• C) negative.
• D) limited.
• E) delayed.

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Definitions:

Inflation Risk

The possibility that the value of assets or income will decrease as inflation shrinks the purchasing power of a currency.

Rate of Return

The net gain or loss on an investment over a specified time period, expressed as a percentage of the investment's initial cost.

Monetary Policy

The process by which a country's central bank controls the supply of money, aiming to achieve macroeconomic goals like controlling inflation, consumption, growth, and liquidity.

Stabilize Economy

Efforts or policies designed to maintain economic stability by controlling inflation, reducing unemployment, and encouraging growth.