The Higher the Anticipated Inflation Rate,_____

question 52

Multiple Choice

The higher the anticipated inflation rate,_____.

• A)the more workers will ask for in wages and the more firms will agree to pay
• B)the more workers will ask for in wages and the less firms will agree to pay
• C)the less workers will ask for in wages and the less firms will agree to pay
• D)the higher the real wage increases offered by firms
• E)the higher the real wage increases asked for by workers

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Definitions:

Duration

A measure of the sensitivity of a bond's price to changes in interest rates, representing the weighted average of the time until a bond's cash flows are received.

Basis Points

A unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument, where one basis point is equal to 1/100th of 1%.

Modified Duration

A measure of the sensitivity of a bond's price to changes in interest rates, adjusted to account for changes in yield.

Market Yield

Refers to the expected yield of a bond based on its current price in the market, which can fluctuate with changes in interest rates and market conditions.