CHAPTER 8INFLATION Difficulty: Easy1. If inflation were always perfectly anticipated, thenA) its real costs would exactly equal the inflation rateB) people would hold less cash but would still suffer losses since money balances are always positiveC) the yield on interest-bearing assets would exactly compensate for losses on non-interest bearing assetsD) unemployment would always be at 4 percentE) wage indexation would not workAns: BDifficulty: Medium2. The concern over inflation Difficulty: Easy3. Which of the following statements is FALSE?1
Difficulty: Medium4. The menu cost of inflation arises sinceDifficulty: Easy5. If inflation this year is higher than expected, thenA) borrowers will gain at the expense of lendersB) lenders will gain at the expense of borrowersC) both lenders and borrowers will gain and the government will loseD) both lenders and borrowers will loseE) the government will lose unless it has implemented an indexed tax systemAns: ADifficulty: Easy
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- Spring '12
- Inflation, Difficulty