Which of the Following Is Not an Example of Inflation

question 278

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 underpredicted 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 underpredicted.
• E)A professional pays more income taxes because tax brackets were not adjusted for inflation.

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Definitions:

Guido Reni

An Italian painter of high-Baroque style, renowned for his graceful figures and religious as well as mythological themes.

Casino Rospigliosi

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Aurora

A natural light display in the Earth's sky, predominantly seen in high-latitude regions around the Arctic and Antarctic.

San Carlo alle Quattro Fontane

Describes a church in Rome, designed by the architect Francesco Borromini, celebrated for its complex Baroque architecture and undulating facade.