Which of the Following Statements Is False

question 152

Multiple Choice

Which of the following statements is false?

• A) An individual living on a fixed income is always made worse off as a result of inflation.
• B) Those individuals receiving welfare benefits have been harmed by inflation because increases in welfare payments have not kept pace with inflation.
• C) Inflation will have no effect on an individual whose income is indexed to the inflation rate.
• D) Some people in society benefit from inflation.

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Definitions:

Socially Optimal Quantity

The level of output where the marginal benefit to society of consuming another unit equals the marginal cost of producing it, leading to the most efficient allocation of resources.

Positive Externality

A benefit that is enjoyed by a third-party as a result of an economic transaction or activity.

Subsidy

A financial aid provided by the government or a public body to reduce the cost or price of goods and services, encouraging production or consumption.

Command-And-Control Policy

It refers to environmental policies that rely on regulations (permission, prohibition, standard setting, enforcement) rather than economic incentives or market solutions.