Unexpected Inflation Redistributes Income

question 14

Multiple Choice

Unexpected inflation redistributes income:

• A)away from workers with cost-of-living adjustments, benefiting employers.
• B)away from renters, benefiting landlords.
• C)away from poor people, benefiting the rich.
• D)away from people with fixed incomes, benefiting people with fixed costs.
• E)away from debtors, benefiting creditors.

---

Definitions:

Times Interest Earned Ratio

A financial metric used to measure a company's ability to meet its debt obligations, calculated by dividing earnings before interest and taxes (EBIT) by interest expenses.

Debt-To-Equity Ratio

A ratio demonstrating the balance between shareholder equity and debt in funding a company's assets.

Return On Equity

A measure of financial performance calculated by dividing net income by shareholders' equity, indicating how efficiently a company uses its equity investment.

Price/Earnings Ratio

A valuation metric for stocks calculated by dividing the market price per share by the earnings per share, indicating how much investors are willing to pay per dollar of earnings.