High and Unexpected Inflation Has a Greater Cost

question 33

Multiple Choice

High and unexpected inflation has a greater cost

• A)for those who borrow than those who save.
• B)for those who hold a little money than for those who hold a lot of money.
• C)for those whose wages increase by as much as inflation, than those who are paid a fixed nominal wage.
• D)for savers in high income tax brackets than for savers in low income tax brackets.

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Definitions:

Garcia and Koelling

Refers to researchers who conducted experiments on taste aversion learning, demonstrating that animals could learn to avoid foods that made them sick.

Law of Effect

A psychological principle stating that responses followed by a satisfying effect become more likely to occur, while responses followed by a discomforting effect become less likely.

Thorndike

An American psychologist known for his work on learning theory and the law of effect, which suggested that behaviors followed by satisfying outcomes are likely to be repeated.

Stimulus

Any event or situation that evokes a response from an organism.