What Do Economists Think About High and Moderate Inflation

question 43

Multiple Choice

What do economists think about high and moderate inflation?

• A)They agree that neither high inflation nor moderate inflation is very costly.
• B)They agree that both high and moderate inflation are quite costly
• C)They agree that high inflation is costly, but they disagree about the costs of moderate inflation.
• D)They agree that moderate inflation is as costly as high inflation, but they disagree about how to determine the costs of inflation.

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Definitions:

Effective Interest Method

The effective interest method is an accounting practice used to amortize bond premiums or discounts over the life of the bond, producing a constant rate of interest over the period.

Semiannual Interest Date

The twice-yearly date on which interest payments are made to bondholders or lenders.

Discount

A reduction from the usual cost of something, often used as a sales strategy to encourage purchases.

Amortize

The process of spreading out a loan or intangible asset cost over a specific period of time for accounting and tax purposes.