In Periods of High Inflation

question 35

Multiple Choice

In periods of high inflation,

• A) people want to hold on to as much money as possible.
• B) the purchasing power of money is decreasing.
• C) nobody wants to work and earn income.
• D) low nominal interest rates are likely to result.

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Definitions:

GICs

Guaranteed Investment Certificates are a form of investment in Canada that ensures a fixed rate of return for a specific duration.

Simple Interest

Interest calculated on the principal amount of a loan or deposit, not including any previously earned interest.

Financial Position

Represents the net worth of an entity, detailing assets, liabilities, and shareholders' equity at a specific point in time.

Assignable Loan Contract

A loan agreement that allows the lender to transfer or assign the loan to another party.