High and Unexpected Inflation Has a Greater Cost

question 22

Multiple Choice

High and unexpected inflation has a greater cost

• A)for those who save than for those who borrow.
• B)for those who hold a little money than for those who hold a lot of money.
• C)for those whose wages increase by as much as inflation than those who are paid a fixed nominal wage.
• D)for savers in low income tax brackets than for savers in high income tax brackets.

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Definitions:

Price-Elasticity Coefficient

A numerical measure of the responsiveness of the quantity demanded or supplied of a good to a change in its price.

Elastic

A term in economics that describes the sensitivity of demand or supply to changes in price or income.

Price Range

The spread between the lowest and highest price at which a product or service is offered in the market.

Demand Schedule

A table that shows the quantity of a good or service demanded at different price levels.