Which of the Following Would Most Likely Suffer the Least

question 227

Multiple Choice

Which of the following would most likely suffer the least from the costs of inflation?

• A)persons on fixed incomes
• B)persons whose incomes rise more rapidly than inflation
• C)firms that have to devote more time and labor to raising prices
• D)an investor that has to pay higher taxes because of the inflation

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Definitions:

Compounded Monthly

A method of calculating interest where the earned interest is added to the principal at the end of each month, allowing the interest in the next month to be calculated on the new total.

Present Value

Today's value of a sum of money or sequence of cash flows set to be received in the future, calculated using a given rate of interest.

Compounded Monthly

This refers to the process where interest is added to the principal balance of a loan or deposit monthly, allowing the interest to then earn interest in subsequent periods.

Compounded Quarterly

The method of calculating interest where the interest is added to the principal amount four times a year.