Assume that for a given year, the nominal interest rate is 9 percent while inflation rises to 11 percent indicating a 4 percent higher rate than anticipated. Which group of people is made better off by the inflation?
a. Those who lend at fixed interest rates
b. Those who borrow at fixed interest rates
c. Those who borrow at variable interest rates
d. Those who receive fixed incomes
e. Those who save at variable interest rates
b
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Most economists think that, in the short run, there is
a. a trade-off between inflation and unemployment, but not in the long run. b. no trade-off between inflation and unemployment, nor is there one in the long run. c. a trade-off between inflation and unemployment, and in the long run also. d. no trade-off between inflation and unemployment, but there is one in the long run also.
Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to
a. fall in six months but not now. b. increase in six months when the price goes up. c. fall now. d. increase now to meet as much demand as possible.