Which of the Following Is Not an Example of Inflation

question 7

Multiple Choice

Which of the following is not an example of inflation causing a redistribution of income because the inflation was unanticipated?

• A)A firm signs a 3-year contract with a union based on a 2 percent anticipated rate of inflation per year,and the actual rate of inflation ends up being 7 percent per year.
• B)A worker receives a raise in salary that is less than the rate of inflation,because management under-predicted inflation.
• C)Firms have to hire an extra worker to change prices in its store because of inflation.
• D)A bank collects a lower amount of interest from a loan because inflation was under-predicted.

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Definitions:

Diabetes Insipidus

A rare condition where the body cannot regulate fluids properly, leading to intense thirst and heavy urination.

Subfornical Organ

A small organ located in the brain that is involved in regulating bodily fluids and certain behaviors.

Angiotensin

A peptide hormone that causes vasoconstriction and an increase in blood pressure, also playing a role in the regulation of fluid and electrolyte balance.

Hypothalamus

A region of the brain below the thalamus that coordinates both the autonomic nervous system and the activity of the pituitary, controlling body temperature, thirst, hunger, and other homeostatic systems.