To Limit the Loss of Purchasing Power from Inflation

question 27

Multiple Choice

To limit the loss of purchasing power from inflation:

• A)people increase the amount of money they hold as cash.
• B)people limit the amount of money they hold as cash.
• C)people do not spend their money.
• D)people limit the amount of goods and services they buy.

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Definitions:

Revolving Line

A credit arrangement that allows a borrower to use or withdraw funds up to a designated limit, repay them, and borrow again.

Simple Interest

A method of calculating interest where the interest charge is based only on the original principal, not on the interest which has been added over time.

Annual Rate

The interest rate for a period of one year.

T-Bill

A short-term government debt obligation backed by the Treasury Department of a country with a maturity of less than one year.