Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 30, Problem 9PA
(a):
To determine
Verifying the statements concerning inflation.
(b):
To determine
Verifying the statements concerning price changes.
(c):
To determine
Verifying the statements concerning
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Which of the following describes a situation in
which the person is hurt by inflation?
Select one:
a. a person paid a fixed income during an
inflationary period
b. a retiree whose pension is adjusted for
inflation
c. a person who borrows money during a
period when inflation is under-predicted
d. a person who lends money during a period
when inflation is over-predicted
Which situation best illustrates the effects of inflation?
Inflation is defined as increases in the average prices in the economy. The February 2022 inflation rate is 7.9% which is the highest in the last 40 years. Have you noticed the price increases in your daily life? What goods are increased by the most? and by how much? What do you think are the causes of the recent inflation? How do you cope with the inflation?
Chapter 30 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
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Similar questions
- What can be a reason why inflation is not occuring when government spending increases in an economy?arrow_forwarda) Why do some economists claim that we should not worry too much about inflation?arrow_forwardthe article discusses the balance between inflationary pressures and other economic tensions. What are some of the factors that were leading to rises in inflation?arrow_forward
- What are the costs of inflation? How high inflation affects the income distribution in the economy? Explain with details.arrow_forwardhow the government somewhat address the issue of inflation? explain.arrow_forwardDistinguish between the general inflation rate and the average inflation rate for specific goods?arrow_forward
- b) Other economists think that there are significant costs associated with inflation above 2-3%. What are they? Briefly discusarrow_forwardTrue or False Since people buy a lot of food and oil (gasoline), we should pay most attention to fluctuations in prices of those two items when talking about inflation. Explain.arrow_forwardWe have talked about inflation. Consider the following question and evaluate: Do rising oil prices cause inflation?arrow_forward
- Which of the below statements IS NOT CORRECT about the term "inflation" or its effect, as Charles Wheelan explains the term in this chapter? Group of answer choices Massive inflation (or, hyperinflation) distorts the economy, as workers rush to spend their cash before it becomes worthless. The most instructive way to think about inflation is not that prices are going up, but rather that the purchasing power of the dollar is going down. Inflation redistributes wealth arbitrarily, as unexpected bouts of inflation are good for debtors and bad for lenders. Inflation favors retired people with fixed incomes and increases the purchasing power of their income.arrow_forwardDoes inflation impose costs on the economy? Explain the problems with anticipated inflation and unanticipated inflation.arrow_forwardSuppose that Lauren is a savvy investor and expects inflation to equal 7 per cent in 2020, but, in fact, prices rise by only 4 per cent. How would this unexpectedly low inflation rate affect her in the following circumstances? a The federal government cuts income tax. b She has a fixed-rate mortgage home loan. c She is a casual worker with no labour contract in place. d She has invested in Treasury bonds.arrow_forward
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