If Inflation Is Much Higher Than Originally Anticipated,_____ Are Better

question 135

Multiple Choice

If inflation is much higher than originally anticipated,_____ are better off and _____ are worse off.

• A)lenders who extended loans at fixed interest rates;people who borrowed at fixed interest rates
• B)people who borrowed at fixed interest rates;banks that extended loans at fixed interest rates
• C)retired people living on a fixed income;people who had borrowed fixed interest rate loans
• D)people who deposited their savings at fixed interest rates;banks that accepted deposits at fixed interest rates
• E)oil refiners who signed labor contracts agreeing to pay their workers the cost-of-living wage;workers who receive that cost-of-living wage

Recognize the limitations of correlational research in establishing causation.

Understand the role of experimental control in isolating the effects of independent variables on dependent variables.

Realize the potential influence of third variables/confounding variables in correlational studies.

Discern the critical difference between correlation and causation in interpreting research findings.

---

Definitions:

Current Dollars

A term referring to the value of a monetary unit, such as a dollar, in terms of its purchasing power at the current time, not adjusted for inflation.

Time Value

The idea that money currently in hand is valued higher than an identical sum to be received in the future because of its ability to generate earnings.

Present Value

The present value of a sum of money to be received in the future, or a series of future cash flows, calculated using an agreed-upon rate of return.

Earnings Rate

The rate at which a company or investment generates income, typically expressed as a percentage of the investment or capital.