Which of the Following Is Not an Effect of Hyperinflation

question 124

Multiple Choice

Which of the following is not an effect of hyperinflation?

• A)Price differences among sellers of the same product become larger.
• B)People hold on to currency for long periods of time.
• C)People tend to exchange the currency that is subject to high inflation for a more stable currency.
• D)Resources are wasted by constant attention to inflation's effects.
• E)Inflation-induced activity that is rational for individuals often has a detrimental effect on the economy as a whole.

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Definitions:

Well-Diversified Portfolio

A portfolio that contains a wide variety of investments across different asset classes and sectors to minimize risk.

Single Index Model

A simplified financial model that describes the return of a security as a linear function of the return of a market index, plus some idiosyncratic noise.

Well-Diversified Portfolio

A collection of investment assets reduced in risk through spreading investments across various securities, sectors, or asset classes.

Single Index Model

A simplification of market models that uses a single factor (usually a market index) to model all securities' returns.