Which of the Following Helps to Explain Why the "Inflation

question 27

Multiple Choice

Which of the following helps to explain why the "inflation fallacy" is a fallacy?

• A)Increases in the price level can be created by increases in money demand.
• B)Nominal incomes tend to rise at the same time that the price level is rising, leaving real income unchanged.
• C)As the price level rises, the value of a dollar falls.
• D)Inflation only changes real variables.

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