Inflation ________ Price Volatility and ________ Allocative Efficiency

question 60

Multiple Choice

Inflation ________ price volatility and ________ allocative efficiency.

• A) decreases; increases
• B) decreases; leaves unchanged
• C) increases; leaves unchanged
• D) increases; decreases
• E) leaves unchanged; increases

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Definitions:

Deposits

Deposits are funds placed into an account at a financial institution, often earning interest over time.

Loans

Money, goods, or services given to an individual or entity with the expectation of a future repayment, typically with interest.

Reserve Requirement

A central bank regulation that sets the minimum fraction of customer deposits and notes that each commercial bank must hold as reserves rather than lend out.

Deposits

Funds placed into an account at a banking institution for safekeeping and possible interest accrual.