In the Short Run, If the Actual Rate of Inflation

question 19

Multiple Choice

In the short run, if the actual rate of inflation falls lower than the expected rate, then

• A)profits will temporarily fall and unemployment will temporarily rise.
• B)profits will temporarily rise and unemployment will temporarily fall.
• C)nominal wages will rise, profits will rise, and unemployment will fall.
• D)nominal wages will fall, profits will fall, and unemployment will rise.

---

Definitions:

Interest-Bearing Note

A debt security that pays interest to the holder at regular intervals until maturity, at which point the principal is repaid.

Proceeds

The total amount of money received from a transaction before any deductions are made.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time, typically reported on the income statement.

Notes Payable

Notes payable refers to the written promises to pay a certain amount of money, usually including interest, by a certain date, and are recognized as liabilities on a company's balance sheet.