One Cost of a Perfectly Anticipated Inflation Is That It

question 57

Multiple Choice

One cost of a perfectly anticipated inflation is that it

• A)transfers wealth from lenders to borrowers.
• B)transfers wealth from borrowers to lenders.
• C)increases menu costs.
• D)damages the role of prices as signals in the economy.

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Definitions:

Dividends

A corporation's distribution of profits to its shareholders as payments.

Paid

Refers to the status of a financial obligation that has been fulfilled or settled.

Constant Annual Dividend

This refers to dividends that are paid out to shareholders at a constant rate each year, without fluctuation.

Market Price

The rate at which services or assets are being marketed currently.