Suppose That Anticipated Inflation Is 4% for the Coming Year,with

question 2

Multiple Choice

Suppose that anticipated inflation is 4% for the coming year,with loan contracts set at 7% in the expectation of a 3% return after inflation.If the actual inflation rate at the end of the year is 2%:

• A) creditors gain at debtors' expense.
• B) people on a fixed income see the purchasing power of their incomes rising.
• C) debtors gain at creditors' expense.
• D) there's a redistribution of income from creditors to debtors.

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Definitions:

Classical Conditioning

A learning process that occurs through associations between an environmental stimulus and a naturally occurring stimulus.

Operant Conditioning

A learning process through which the strength of a behavior is modified by reinforcement or punishment.

Social Learning Theory

A theory of learning that posits people can learn new behaviors and norms through observing, imitating, and being reinforced by others.

Stress Inoculation Training

A cognitive-behavioral therapy technique teaching individuals to cope with stress by preparing them in advance to handle stressful situations effectively.