In a Market Economy,uncertain Levels of Inflation

question 32

Multiple Choice

In a market economy,uncertain levels of inflation

• A) make prices less useful as signals for resource allocation.
• B) prompt firms to enter into fewer short-term contracts, and more long-term contracts, with suppliers.
• C) balance out income redistribution in the long run.
• D) are more beneficial to lenders than to borrowers, as lenders have a tendency to overestimate the expected inflation rate.

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