If Inflation Falls

question 17

Multiple Choice

If inflation falls,

• A)people choose to put in more effort to keep money balances low.When inflation is unexpectedly low it redistributes wealth from lenders to borrowers.
• B)people choose to put in more effort to keep money balances low.When inflation is unexpectedly low it redistributes wealth from borrowers to lenders.
• C)people choose to put in less effort to keep money balances low.When inflation is unexpectedly low it redistributes wealth from lenders to borrowers.
• D)people choose to put in less effort to keep money balances low.When inflation is unexpectedly low it redistributes wealth from borrowers to lenders.

---

Definitions:

Redistributing Income

The transfer of income from certain individuals or groups to others through mechanisms like taxation, welfare programs, and social policies to achieve greater social equity.

Income Distribution

The way in which total income is shared among the members of a society.

Allocation of Resources

The process of distributing available resources for various uses in an economy.

Leaky Bucket

A metaphor often used in economics to describe the inefficiencies or waste that can occur in the distribution or allocation of resources.