One cost of a perfectly anticipated inflation is that

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Chapter 18 / Exercise 015
Exploring Economics
Sexton
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21) One cost of a perfectly anticipated inflation is that it A) transfers wealth from lenders to borrowers. B) transfers wealth from borrowers to lenders. C) increases menu costs. D) damages the role of prices as signals in the economy.
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Exploring Economics
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Chapter 18 / Exercise 015
Exploring Economics
Sexton
Expert Verified
5 22) Shoe leather costs are
23) One cost of an unanticipated inflation is that it
24) Unanticipated deflation can create unemployment if
25) If nominal interest rates have a lower bound of zero and deflation occurs at 3% (i.e., the inflation rate equals -3%, then the lowest real interest rate possible is A) -3%. B) 0%. C) 3%. D) 6%.
26) Describe the major costs of inflation, being sure to distinguish between anticipated and unanticipated inflation.
27) The costs of disinflation would be low if
28) Keynesians prefer a disinflation policy of
6 29) The main determinant of how quickly expected inflation adjusts to changes in monetary policy is A) the slope of the Phillips curve. B) the slope of the short-run aggregate supply curve. C) the credibility of the central bank. D) the degree of indexation in the economy.
30) What are the pros and cons of using cold turkey disinflation compared to a policy of gradualism?

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