During an inflationary period, a household with savings of $100,000
A) loses because inflation increases the real tax on the interest paid.
B) gains because the inflation gives savers more money and so more purchasing power.
C) loses because the inflation increases the after-tax real interest rate.
D) gains because inflation increases the value of their savings.
E) neither gains nor loses because inflation does not affect savers.
A
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Which of the following is not an example of foreign aid?
a. U.S. discount department stores purchasing toys from Chinese manufacturers b. The International Monetary Fund extending loans to countries that have trouble with their balance of payments c. The World Bank providing loans and grants to support health and education programs d. The U.S. government paying to build an electricity plant in Albania e. The Australian government paying to repair highways in Tonga
If individuals behave irrationally in some circumstances, why do economists typically assume that they behave rationally? a. The assumption of rationality allows economists to make powerful statements that apply the majority of the time. b. The assumption of rationality was used before psychologists discovered ways in which individuals behave irrationally. c. The assumption of rationality is
used because economists do not understand principles of psychology. d. The assumption of rationality has yet to be refuted with scientific evidence.