High and Unexpected Inflation Has a Greater Cost

question 28

Multiple Choice

High and unexpected inflation has a greater cost

• A)for those who borrow than for 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 for 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:

Elasticity

A measure in economics that denotes the responsiveness of the quantity demanded or supplied of a good or service to a change in its price.

Product Uses

The various applications or purposes for which a product is intended or can be utilized by consumers.

Unit Elasticity

A situation in economics where a change in the price of a good or service results in a proportionally equal change in the quantity demanded or supplied.

Price Elasticity of Demand

A measure of the sensitivity of quantity demanded of a good to a change in its price.