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Unformatted text preview: unemployment c. Provides a safety net for some but not all unemployed d. Creates incentives that lower the unemployment rate 4. Which of the following is frequently a real cost of inflation? a. It shifts real income from wages to profits b. It raises the price of necessities beyond the reach of ordinary people c. It redistributes real income in an arbitrary way d. It is particularly hard on the real income of borrowers 5. If nominal interest rates are fixed, an increase in inflation: a. Lowers real interest rates b. Raises real interest rates c. Helps lenders d. Helps people on fixed incomes 6. Since governments tax nominal, not real, incomes, an increase in inflation may create an unintended tax burden on: a. Wage earners b. People on fixed incomes c. Borrowers d. People who declare capital gains...
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This note was uploaded on 09/09/2008 for the course ECON 202 taught by Professor Fernandez during the Fall '08 term at University of Louisville.
- Fall '08