If everyone knew in advance the exact rate of inflation:
A. the economy will have reached its long run equilibrium.
B. borrowers would be discouraged when inflation will be low and lenders when inflation will be high.
C. the risk of the breakdown of financial intermediation would increase.
D. the exact rate of inflation wouldn't matter so much because people could prepare.
Ans: D. the exact rate of inflation wouldn't matter so much because people could prepare.
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Automatic stabilizers
What will be an ideal response?
If the price of chocolate chip cookies falls, then
A) the supply curve of chocolate chip cookies shifts rightward. B) the supply curve of chocolate chip cookies shifts leftward. C) there is a movement downward along the supply curve of chocolate chip cookies. D) there is a movement upward along the supply curve of chocolate chip cookies.