The systemic costs and burdens that inflation imposes upon a society are almost entirely the result of
A) government price controls.
B) inability to predict its rate and timing.
C) the fact that no one can ultimately gain from higher prices because everyone is a consumer.
D) the lag between the rise of wage costs and the subsequent rise of prices.
E) the lag between the rise of prices and the subsequent rise of wages.
B
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You agree to lend $1,000 for one year at a nominal interest rate of 10%. You anticipate that inflation will be 4% over that year. If inflation is instead 3% over that year, which of the following is true?
A) The person who borrowed the $1,000 will be worse off as a result of the unanticipated decrease in inflation. B) The real interest rate you earn on your money will be negative. C) The purchasing power of the money that will be repaid to you will be lower than you expected. D) The real interest rate you earn on your money is lower than you expected.
A tariff is
a. a tax on imports b. a legal limit on quantities of goods that can be imported c. a voluntary limit on quantities of goods that can be imported d. a quality restriction on imports e. a subsidy for exports