When the actual inflation rate turns out to be greater than the expected inflation rate, who gains — the borrower or the lender — and who loses? Explain why
What will be an ideal response?
The borrower gains because he pays back the loan in cheaper dollars — dollars that have lost more purchasing power than was expected. The lender loses because she receives dollars that have lost more purchasing power than was expected.
Economics
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When the percentage change in the quantity demanded exceeds the percentage change in price, then demand is
A) inelastic. B) unit elastic. C) elastic. D) irrelevant. E) undefined.
Economics
A decrease in aggregate demand will
A) cause the short-run Phillips curve to shift to the right. B) decrease unemployment. C) move the economy to a lower point on the short-run Phillips curve. D) cause inflation.
Economics