Question

1- During inflationary periods,

a.   the purchasing power of money rises.

b.   the real value of money remains constant.

c.   the real value of money rises.

d.   the real value of money falls.

2- If actual inflation is greater than the expected rate of inflation, then it is likely that

a.   creditors gain at the expense of borrowers.

b.   the borrowers are made better off than lenders.

c.   the borrowers are made worse off than lenders.

d.   savings accounts have increased in real terms.

3- An example of an intermediate good would be a(n)

a.   paper used to print the hard-copy of our textbook.

b.   the suit you purchased on Black Friday and wore for New Year’s Eve.

c.   the appliance you use to heat up your lunch..

d.   the used car you purchase.

Answer 1

Answer)

1. During inflation real money or purchasing power of money falls as it becomes costlier in real money terms to buy same products,so correct option is d) real value of money falls.
2. If actual inflation is more than expected inflation,then borrowers have to pay lesser in real money terms,that is since value of real money money is decreased,they have to pay lesser money in real terms,so correct option is b) the borrowers are made better off than lenders.
3. intermediate good is a good used in making final product which in given options is a) paper used to print hard copy of our textbook is paper is intermediate good in making text book,so correct option is a) paper used to print hard copy of our textbook

Answer is complete.Thank you!