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:

Dualistic Thinking

Dividing the cognitive world into opposites, such as good versus bad, or us versus them.

Cognitive World

A term that may refer to the realm of mental processes and structures involved in perception, thinking, understanding, and memory.

Serotonin

A neurotransmitter important in the regulation of mood, anxiety, and happiness, among other functions.

Major Mood Swings

Significant fluctuations in emotional state that can impact an individual's behavior and perception.