Which of the Following Is Not an Example of Inflation

question 7

Multiple Choice

Which of the following is not an example of inflation causing a redistribution of income because the inflation was unanticipated?

• A)A firm signs a 3-year contract with a union based on a 2 percent anticipated rate of inflation per year,and the actual rate of inflation ends up being 7 percent per year.
• B)A worker receives a raise in salary that is less than the rate of inflation,because management under-predicted inflation.
• C)Firms have to hire an extra worker to change prices in its store because of inflation.
• D)A bank collects a lower amount of interest from a loan because inflation was under-predicted.

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Definitions:

Lateral

Pertaining to or situated at the side; often refers to relationships or movements that are not hierarchical.

Organization

An entity comprising multiple people, such as a company or society, structured to achieve specific goals.

Interruptions

Describes unexpected events or disturbances that temporarily halt the progress of an activity or process.

Effective Communication

Effective communication is the process by which information is clearly and accurately exchanged between individuals or groups, ensuring mutual understanding and minimizing misunderstandings.