The money supply consists of:

Bob deposits $100 in a bank account that pays an annual interest rate of 5 percent. A year later, Bob withdraws his $105 . If deflation was 7 percent during the year the money was deposited, then Bob's purchasing power has increased by 12 percent

a. True b. False Indicate whether the statement is true or false

If workers can see inflation coming, and if they receive compensation for it, then inflation does not erode real wages.

Answer the following statement true (T) or false (F)