Who is hurt and who benefits from inflation? Why?
What will be an ideal response?
Inflation hurts those on fixed incomes and those that save at fixed nominal rates of interest. Inflation benefits those who borrow at fixed nominal rates of interest and those whose wealth increases faster than the rate of inflation.
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Imperfect asset substitutability assumes
A) the returns on foreign and domestic currency bonds are identical. B) the returns on foreign and domestic currency are unrelated. C) the risks of holding foreign and domestic currency are identical. D) the risks of holding foreign and domestic currency are unrelated to returns. E) the returns on foreign and domestic currency differ and are influenced by risk.
Helping the poor is not necessarily the same thing as promoting greater equality
a. True b. False