Suppose there's an unanticipated increase in the rate of inflation. Which of the following is likely to be true? Select one: O a. Workers whose nominal wages are set at the beginning of the year are likely to suffer a decrease in real wages. O b. Workers whose nominal wages are set at the beginning of the year are likely to enjoy an increase in real wages. O c. The real value of outstanding loan balances of debtors will increase. O d. Creditors who made loans based on the anticipated rate of inflation will earn a higher real interest rate than they expected.

Suppose there's an unanticipated increase in the rate of inflation. Which of the following is likely to be true? Select one: O a. Workers whose nominal wages are set at the beginning of the year are likely to suffer a decrease in real wages. O b. Workers whose nominal wages are set at the beginning of the year are likely to enjoy an increase in real wages. O c. The real value of outstanding loan balances of debtors will increase. O d. Creditors who made loans based on the anticipated rate of inflation will earn a higher real interest rate than they expected.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2 of 2) - Google Chrome lu.om/mod/quiz/attempt.php?attempt=1835779&cmid=880584&page=1 EARNING SYSTEM (ACADEMIC) Time left 0:32:25 ion Exhibit 6-3 it of Year CPI e flag 1 141.5 139.2 142.3 146.6 Refer to Exhibit 6-3. Prices changed by percent between year 2 and year 3. Select one: O a. 1.6 O b. 2.2 O c. 1.9 O d. 2.3 O e. 2.7 on Table 20-17 tix MAG241C 1500R 144
Which one of the following is NOT true about the costs of inflation to society? O Unexpected higher inflation rate hurts lenders. O Higher inflation rate increases the cost of printing menus and catalogues for businesses. Higher inflation rate creates general inconvenience to the public Unexpected higher inflation rate hurts borrowers O Higher inflation distorts individuals' tax liabilities
The interest rate on Real Return Bonds is a direct measure of Select one: O a. the rate of deflation O b. the rate of inflation O c. the real interest rate O d. the nominal interest rate
If the real interest rate is 2% and expected inflation is 3%, the nominal interest rate is O -1%. O 1%.. 6%. 5%.
4) If actual inflation is more than expected inflation, which of the following groups will most certainly benefit? а. Lenders b. Borrowers с. Minorities d. Women е. Men Suppose that the consumer price index of a country was 160 at year-end 2004 and 168 at the 5) end of 2005. What was the country's inflation rate during 2005? 5 percent b. а. 8 percent 60 percent d. с. 68 percent 6) If the consumer price index (CPI) at the end of year one was 100 and was 108 at the end of year two, the inflation rate during year two was zero; the CPI of 100 indicates that prices were stable. b. а. 8 percent. 5 percent. d. c. 108 percent.
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Suppose the real interest rate is 3% and expected inflation is 3%. What is the nominal interest rate? nominal interest rate: = I All else equal, if inflation decreases by 0%, what will happen to the nominal interest rate? o The real interest rate will decrease by 0%. o The nominal interest rate will decrease by 0 %. o The nominal interest rate will increase by 0%. o The real interest rate will increase by 0%. 1 What do economists call the relationship between the nominal interest rate and the inflation rate? o shoeleather costs Leontief paradox 86 • Taylor rule Fisher equation
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If the nominal interest rate is a constant 15 percent and anticipated inflation falls from 10 percent to 7 percent, the real interest rate would change from Select one: O A. 8 to 5 percent. O B.7 to 9 percent. OC5 to 8 percent. O D. 15 to 10 percent.
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K Suppose in 2018, the United Kingdom economy was at full employment Nominal GDP was £2,730 billion, the real interest rate was 3 percent per year, the inflation rate was 3 percent a year, and the price level was 130 Calculate the nominal interest rate In the long run, if the real interest rate remains the same but the inflation rate increases to 6 percent a year, how does the nominal interest rate change? The nominal interest rate is percent a year In the long run, if the real interest rate remains the same but the inflation rate increases to 6 percent a year, then the nominal interest rate perce