Inflation reduces the average real income in the economy and redistributes purchasing power

You value your economics textbook at $10. Someone else values it at $25, and that person is willing to pay you $20 for your textbook. Would selling your textbook to this person for $20 be Pareto efficient?

A. No, the person paid you $20 for the book so his net benefit was only $5, whereas your net benefit was $10. For this change to be Pareto efficient, each of you should have the same net benefit. B. Yes, because even though you gain from the trade and he loses, there is the potential for you to compensate him for his loss. C. No, because you did not receive the maximum amount the other person would have been willing to pay for the textbook. D. Yes, because both of you are better off as a result of the trade.

LTV ratio appears to be positively related to

A) bond price. B) stock price. C) housing price. D) none of the above E) all of the above