**Question 14: Deflation Effects**Deflation is described as a decreasing average level of prices or a negative rate of inflation. If deflation is considered the converse or opposite of inflation, then:a. There would be no income redistribution effects of deflation.b. Creditors would benefit at the expense of debtors.c. Those on fixed incomes would benefit at everyone else’s (or the rest of the world’s) expense.d. Both b) and c) are correct.

There is an inverse relationship between the price level prevailing in the economy and the value of…

14. Deflation is a falling average level of prices or a negative rate of inflation. If deflation is the converse/opposite of inflation a. There would be no income redistribution effects of deflation. b. Creditors would benefit at the expense of debtors. c. Those on fixed incomes would benefit at everyone else's (rest of world's) expense. d. Both b) and c) are correct.

14. Deflation is a falling average level of prices or a negative rate of inflation. If deflation is the converse/opposite of inflation a. There would be no income redistribution effects of deflation. b. Creditors would benefit at the expense of debtors. c. Those on fixed incomes would benefit at everyone else's (rest of world's) expense. d. Both b) and c) are correct.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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8. Suppose that people expect inflation to be 3 percent but that, in fact, prices rise by 5 percent. Describe how this unexpectedly high inflation would help or hurt the following: a. the government b. a homeowner with a fixed-rate mortgage C. a union worker in the second of a labor year contract d. a college that has invested some of its endowment in government bonds
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de whetner this unexpected lower rate of inflation would help or hurt each of the following groups. a. A homeowner with a fixed-rate mortgage b. A union worker with a fixed labor contract. C. A company that has invested some of its endowment in government bond which pay fixed rate of return.
10. Under the following conditions, estimate the price of an item during year 3 A. If it is estimated that its price at the beginning of the analysis is $8.50 and suffers an inflation of 5.5% per year. B. If it is estimated that its price at the beginning of the analysis is $8.50 and it suffers an inflation in year 1 of 3%, in year 2 of 5% and in year 3 of 2%. C. If it is estimated that its price in the first year of the analysis will be $8.50 and it suffers an inflation of 5% per year. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
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Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.