Q.1.19Creditors and debtors tend to lose during an inflationary period since:(1)The nominal interest rate on their credit tends to fall;(2)The real value of their credit tends to decrease;(3)Debtors pay more in real terms;(4)The real interest rate on their credit remains constant.Q.1.20 Although government intervention in an economy is sometimes justified,governments may still fail when they intervene. Government failure occursbecause:(1)Politicians often make decisions that win votes in the short termrather than making decisions that maximise long term economicprosperity;(2)Government organisations are largely bureaucratic and, as such arenot subject to competition or under pressure to maximise profits;(3)Both statements (1) and (2) are correct;(4)Neither statement a nor b is correct.

Creditors and debtors tend to lose during an inflationary period since: (1) The nominal interest rate on their credit tends to fall; (2) The real value of their credit tends to decrease; (3) Debtors pay more in real terms; (4) The real interest rate on their credit remains constant.

Creditors and debtors tend to lose during an inflationary period since: (1) The nominal interest rate on their credit tends to fall; (2) The real value of their credit tends to decrease; (3) Debtors pay more in real terms; (4) The real interest rate on their credit remains constant.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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