The Problems That Inflation Creates for Society Are Caused Primarily

question 166

Multiple Choice

The problems that inflation creates for society are caused primarily by

• A)greed on the part of sellers
• B)uncertainty regarding the rate at which different prices are increasing or will increase
• C)too much incentive to lend money
• D)greed on the part of union leaders
• E)governments' actions to reduce the effects of inflation

Understand the influence of taxes on the equilibrium quantity of goods.

Identify the per-unit burden of taxation on sellers and buyers.

Recognize the relationship between the size of a tax and its resulting deadweight loss.

Understand how taxes influence buyer and seller behaviors in terms of market participation and economic welfare.

---

Definitions:

Interest Rate Spread

The difference between the interest rates of two different financial instruments, often highlighting the comparative risk or return.

Insurance Premium

The amount that individuals or organizations must pay for their insurance policies, covering a wide range of risks.

Risk Premium

The additional return expected by an investor for holding a risky asset rather than a risk-free asset, compensating for the extra risk.

Human Capital

The economic value of a worker's experience and skills, including factors like education, training, intelligence, skills, health, and other things employers value.