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Unformatted text preview: The effects of inflation on individuals depend which type of inflation exists VI.Inflation: nominal vs. real interest rates a. Inflation and interest rates i. Nominal rate of interest 1. The market rate of interest expressed in today’s dollars ii. Real rate of interest 1. The nominal rate of interest minus the anticipated rate of inflation VII. Inflation: winners & losers a. Unanticipated positive inflation i. Creditor loses ii. Debtors gain VIII. Inflation: protecting yourself a. Cost-of-living (COLAs) i. Clauses in contracts that allow for increases in specified nominal values to account for changes in the cost of living IX.Business Fluctuations a. The ups and downs in overall business economic activity i. Economic growth ii. Employment iii. Price level X. Business fluctuations a. Expansion b. Contraction c. Recession d. Depression...
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