### Understanding Inflation12. **Inflation**: a. Decreases everyone’s nominal income.b. Decreases everyone’s real income.c. Redistributes income in a manner in which the benefits of inflation to the community exceed the costs.d. Redistributes income in an arbitrary fashion.---This text is a multiple-choice question exploring the impacts of inflation. The options describe different effects inflation might have on income and its distribution within a community. - **Option a** suggests a decrease in nominal income, but typically, inflation does not affect nominal income; instead, it affects real income.- **Option b** accurately states that inflation decreases real income, as the purchasing power of money decreases.- **Option c** discusses a scenario where income redistribution benefits the community, although this isn't a typical characteristic of inflation.- **Option d** points to arbitrary redistribution, reflecting how inflation can affect individuals differently depending on their economic circumstances.This material is useful for understanding basic economic concepts related to inflation and its social and economic implications.

Inflation means increase in average price level of goods and services. Nominal income is not adjusted for inflation. Increase in price level increases nominal income.Inflation redistributes income arbitrarily in a manner that some are better off and some are worse off. Borrowers are better off as they pay money which is worth less now and lenders are worse off as they receive money which is worth less. Correct - d. Redistributes income in an arbitrary fashion.

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12. Inflation a. Decreases everyone's nominal income. b. Decreases everyone's real income. c. Redistributes income in a manner in which the benefits of inflation to the community exceed the costs. d. Redistributes income in an arbitrary fashion.

12. Inflation a. Decreases everyone's nominal income. b. Decreases everyone's real income. c. Redistributes income in a manner in which the benefits of inflation to the community exceed the costs. d. Redistributes income in an arbitrary fashion.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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