Inflation Is Undesirable Because It

question 248

Multiple Choice

Inflation is undesirable because it

• A) arbitrarily redistributes real income and wealth.
• B) invariably leads to hyperinflation.
• C) usually is accompanied by declining real GDP.
• D) reduces everyone's standard of living.

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Definitions:

Wages

Payments made to employees for their labor, typically calculated on an hourly, daily, or piecework basis.

Economic Rent

The excess payment made to a factor of production over and above what would be needed to keep it in its current use.

Marginal Revenue Product

The additional revenue generated from employing one more unit of input, such as labor or capital.

Primary Labor Market

The segment of the labor market that consists of high-paying jobs with good benefits and job security, often requiring higher education or specialized skills.