An Unanticipated Increase in the Inflation Rate Will Most Likely

question 129

Multiple Choice

An unanticipated increase in the inflation rate will most likely:

• A)either increase or decrease the real value of the national debt, depending on the effect of inflation on capital gains and losses.
• B)increase the real value of the national debt.
• C)transfer real wealth from bondholders to the government.
• D)have no effect on the real value of the national debt.

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Definitions:

Certain Outcome

An outcome that is guaranteed or known to happen without any doubt.

Risky Outcome

A potential result of an action or decision that involves uncertainty and the possibility of negative consequences.

Historical Analogy

The practice of drawing comparisons between past and present events, situations, or decisions to understand or predict current phenomena.

Cognitive Psychologists

Professionals who study mental processes such as attention, language use, memory, perception, problem solving, creativity, and thinking.