Explain 2 a farmer buys machinery with a fixed rate

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Explain:2. A farmer buys machinery with a fixed-rate loan to be repaid over a ten-year period.
UExplain:3, Your family buys a new home with an adjustable-rate mortgage.,
UExplain:
4. Your savings from your summer job are in a savings account paying a fixed rate of interest.
UExplain:5. A widow lives entirely on income from fixed-rate corporate bonds.H G UExplain:P62Advanced Placement Economics Macro economies: Student Resource Manual © Council for Economic Education, New York, N.Y.i1
6. A retired couple lives e.ntirely on income from a fixed-rate pension the woman receives from herformer employer.H G laiÿ
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7. A retired man lines entirely on income from Social Security.
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8. A retired bank official lives entirely on income from stock dividends.
UExplain:9. The federal government has a $14 trillion debt.,l:; )H G UExplain:q i'1!2ÿY.iÿ.ili" i --r
10. k firm signs a contract to provide maintenance services at a fixed rate for the next five years.
UExplain:11. A state government receives revenue mainly from an income tax.H G UExplain:63Advanced Placement Economics Macroeconomics: Student Resource Manual © Council for Economic Education, New York, N.Y.
12. Alocal government receives revenue mainly from fixed-rate license fees charged to businesses.H G UExplain:13. Your friend rents an apartment with a three-year lease.H G UExplain:14. A bank has loaned millions of dollars for home mortgages at a fixed rate of interest.H G UExplain:15. Parents are putting savings for their child's college education in a bank savings account.H G UExplain:64 Advanced Placement Economics Macro economics: Student Resource Manual © Council for Economic Education, New York, N.Y.
The Costs of lr flmionUnanticipated inflation helps some people and hurts others. For example, borrowers are helped byunanticipated inflation while lenders are hurt. However, even anticipated inflation results in costs forthe econom3n There are three types of costs that result from inflation: shoe leather costs, menn costs,and unit of account costs.Shoe leather costs: increased transaction costs caused by inflation.The term shoe leather costs comes from the idea that inflation results in the need for more trips to the bankand store, wearing out peoples' shoe leather. While technological advances have decreased the amount ofwalking required to conduct transactions, shoe leather costs still exist hÿ the form of actions that people musttake as a result of inflation. Shoe leather costs can be quite substantial in an economy with hyperinflation(very high inflation rates).Melÿu costs: the cost of changing a listed price.Inflation requires firms to incur a cost to change their prices. As a result of inflation, firms must changethe tag on the product or shelf, the information attached to a UPC code in a computer, the sticker priceon a car, or reprint a restaurant menu (the origin of the term). With hyperinflafion, menu costs can causeconsumers and merchants to abandon prices listed in their local currency. Menu costs can be substantial intimes of high inflation.

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