Question

3 ) If there is inflation : A ) the unit of account function of money...

3 ) If there is inflation :

A ) the unit of account function of money is improved

B ) the unit of account function of money is undermined.

C ) the distributional function of money is improved

D ) the distributional function of money is undermined.

______________________________________________________________

4 )

Currently if inflation is 2% and the goods inflation target is 2.5%, policymakers

A ) congratulate themselves for coming in under their target.

B ) are unhappy because they have come in under their target.

C ) are indifferent because they don’t have an inflation target.

D ) are indifferent because they are more interested in asset inflation.

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Homework Answers

Answer #1

Answer : 3) The answer is option A.

Unit of account is a function of money. Unit of account function of money shows the value of goods and services. When the value of goods and services measure in terms of money then it is called price. When price rise then it is called inflation. So, in case of inflation as price rises hence the "unit account function of money" improve. Therefore, option A is correct.

4) The answer is option D.

As the current inflation rate is lower than the targeted inflation rate hence policymakers are indifferent about that they should congratulate themselves or should unhappy. Because policymakers are interested to attain their targeted inflation level.

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