Which of the following is not an economiceffect of inflation?a. NoneO b. Difficulty in doing long termcontractsc. Savings increases consumptiondecreasesO d. Income distribution in favour ofborrowere. Decrease in purchasing power ofincome.

Inflation refers to the general rise in prices of goods and services in the economy. The rapid and…

Answered: Which of the following is not an…

Business

Economics

Which of the following is not an economic effect of inflation?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations

Section: Chapter Questions

Problem 14P

See similar textbooks

Related questions

Q: Define the term inflation factor?

A: Inflation refers to the rise in prices. It is defined as a rate where the general price level of…

Q: What is the difference between interest rates and inflation rates? Give an example of each.

A: Interest Rate and Inflation rate are different from each other. Inflation is the rise in the general…

Q: Describe what is the Specific inflation rate? Give an example?

A: Inflation rate: The term inflation refers to the average price rise over a certain period of time.…

Q: compare between demand pull and cost push inflation

A: Inflation: It is the situation when there is a rise in the price of goods and services that leads to…

Q: Determine whether there is a relationship between the unemployment rate and inflation rate.

A: Inflation rate gives the percentage change in price level over a period of time.Unemployment rate is…

Q: Which situation best illustrates the effects of inflation?

A: Inflation refers to a general rise in the price level of goods and services in the market over a…

Q: Describe the procedure of applying Specific Inflation Rates? Give an example?

A: A specific inflation rate can be calculated as : = ((B-A)/A)*100 Where B is Index value of Current…

Q: Identify several parties likely to be helped and hurt by inflation.

A: During unanticipated inflation occurrence of any redistribution of wealth and income is the…

Q: To find the average inflation rate, how can we establish the equivalence?

A: Average inflation rate can be referred as the effect of changing yearly inflation rate over a period…

Q: Explain the trade-off between unemployment and inflation by citing a concrete example.

A: General increase in price level for goods and services in the economy is known as inflation.…

Q: Discuss the costs associated with high inflation.

A: Inflation is a period of abnormal hike in the general price level in the economy. This means that…

Q: Evaluate how each of the following individuals would be affected by unanticipated inflation: (a) A…

A: Meaning of Inflation: Inflation generally arises when there is an excessive increase in the level…

Q: One of the economic effects of inflation is that it discourages saving and investment. Why? Support…

A: Inflation is increase in general price level for all goods and services in the economy. For example,…

Q: Which of the following is a potential benefit of inflation? Higher unemployment Higher prices Less…

A: Inflation refers to the continuous increase in general price level.

Q: Evaluate how each of the following individuals would be affected by unanticipated inflation: (a)…

A: Unanticipated inflation has varied impacts on the different groups. Some groups might be benefited…

Q: What could be a real world example that explains the difference between inflation and deflation?

A: Inflation refers to a rise in the general price level in an economy whereas deflation refers to a…

Q: If, over time, wages and salaries on average rise at least as fast as inflation, why do people worry…

A: Determining the effect of inflation on income

Q: Explain how government gains from unexpected inflation when it borrows?

A: Inflation refers to a rise in the price of goods and services in an economy. This leads to a fall in…

Q: How will each of the following individuals be affected by unanticipated inflation: (a) A department…

A: Inflation(π) refers to the increase in the general price(P) level and thus leads to the decrease in…

Q: Why is there no long-run trade-off between unemployment and inflation?

A: Solution: Trade-off: It refers to an act of balancing between two opposing situation or thing.…

Q: How does demand-pull inflation differ from cost-push inflation?

A: The inflation is an abnormal increase in the general price level in the economy. The price will…

Q: Which of the following correctly shows the steps needed to calculate the inflation rate?

A: The consumer price index is used in measuring the price level. The consumer price index converts the…

Q: What can be a reason why inflation is not occuring when government spending increases in an economy?

A: inflation refers to the sustained rise in the general price level. It is the general rise in the…

Q: What is the Inflation-free interest rate? Give an example?

A: Inflation refers to a continuous increase in the general price level of goods and services in an…

Q: Please explain fully, Can inflation decrease unemployment?

A: Inflation is the increase in the price level of the goods in the economy. Unemployment is the…

Q: Explain the Rate of inflation?

A: Inflation is the rise in the price of practically all goods and services in the economy. Real income…

Q: Why do we need to calculate the average inflation rate?

Q: If actual inflation is more than expected inflation,

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: If, over time, wages and salaries on average rise at least as fast as inflation, should people have…

A: Inflation means rise in general price level.

Q: Distinguish between the market interest and the inflation rate?

A: The market interest rate is the interest rate that is prevailing in the market. The interest rate is…

Q: Determine the economic loss or gain in the present worth caused by inflation?

A: Present worth is defined as the present value of the future amount of money or income for a given…

Q: A little bit of inflation is worse for society than a little bit of unemployment.

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: Which of the following is true about inflation? a. Inflation affects everyone negatively b.…

A: Inflation is defined as the rise in the average price level of commodities and services in the…

Q: Under what conditions is inflation relatively insensitive to wages and unemployment??

A: The inflation is the rise in the aggregate price level. The wages are the returns to the labor and…

Q: Characteristics of inflation

A: Inflation refers to the rise in the prices of goods and services in an economy. In other words, a…

Q: The relationship between the inflation rate and the unemplotment rate is it a micro or macro…

A: The inflation rate is the rate at which the price level in economy increases over time. The…

Q: What is demand-pull inflation?

A: Demand-pull inflation occurs when the AD for a service or good exceeds the AS. It initiates with…

Q: What is the difference between the price level and the rate of inflation?

A: The study of economics deals with the allocation of scarce resources in the most optimal way, when…

Q: Evaluate how each of the following individuals would be affected by unanticipated inflation: (a)…

A: Unanticipated inflation affect differently to different sections. Because someone will get benefit…

Q: Does the BLS method of assessing inflation imply that consumers actually purchase the same goods and…

A: The consumer price index is an economic instrument used to measure the changes in the price level in…

Q: In terms of CPI, define the general inflation rate?

A: Inflation is the increase in the price level of goods and services in the market. This reduces the…

Q: how the government somewhat address the issue of inflation? explain.

A: Inflation is the economic situation when the goods and services are produced more than the natural…

Q: If an economy has experienced unanticipated inflation, which of the following groups has most likely…

A: Unanticipated inflation is a term indicates an increase in price level at a faster pace than…

Question

Which of the following is not an economic
effect of inflation?
a. None
O b. Difficulty in doing long term
contracts
c. Savings increases consumption
decreases
O d. Income distribution in favour of
borrower
e. Decrease in purchasing power of
income.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

A fixed-rate mortgage has the same interest rate over the life of the loan, whether the mortgage is for 15 or 30 years. By contrast, an adjustable-rate mortgage changes with market interest rates over the life of the mortgage. If inflation falls unexpectedly by 3, what would likely happen to a homeowner with an adjustable-rate mortgage?
What has been a typical range of inflation in the U.S. economy in the last decade or so?
The index number representing the price level changes from 110 to 115 in one year and then from 115 to 120 the next year. Since the index number increases by five each year, is five inflation rate each year? Is the inflation rate the same each year? Explain your answer.
The total price of purchasing a basket of goods in the United Kingdom over four years is: year 1=940, year 2=970, year 3=1000, and year 4=1070. Calculate two price indices, one using year 1 as the base year (set equal to 100) and the other using year 4 as the base year (set equal to 100). Then, calculate the inflation rate based on the first price index. If you had used the other price index, would you get a different inflation rate? If you are unsure, do the calculation and find out.
Given the federal budget deficit in recent years, some economists have argued mat by adjusting Social Security payments for inflation using me CPI, Social Security is warming recipients. What is their argument, and do you agree or disagree with it?
Describe a situation, either a government policy situation, an economic problem, or a private sector situation, where using the CPI to convert from nominal to real would be more appropriate man using the GDP deflate:
What is the difference between the price level and the tale of inflation?
Why does the quality/new goods bias arise if we calculate the inflation rate based on a fixed basket of goods?
Go to this website (http://www.measuringworth.com/ppowerus/) for the Purchasing Power Calculator at measuringWorth.com. How much money would it take today to purchase what one dollar would have bought in the year of your birth?