Which of the Following Is Not a Cost Posed by Inflation

question 218

Multiple Choice

Which of the following is not a cost posed by inflation?

• A)Inflation reduces the affordability of goods and services to the average consumer.
• B)The money that consumers and firms hold loses its purchasing power.
• C)Firms must pay for changing prices on products and printing new catalogs.
• D)Banks can lose if they under predict inflation and charge an interest rate that does not completely compensate for inflation.

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Definitions:

Trade Deficits

A situation in which a country's imports exceed its exports, resulting in a negative balance of trade.

Speculation

The act of investing in financial assets with the hope of profiting from future price changes, often involving significant risk.

Nation's Currency

The legally accepted form of money that circulates within a country and serves as a medium of exchange, store of value, and unit of account.

Exchange-Rate Systems

The rules and conventions that govern how the value of a country's currency is determined in relation to other currencies.