Inflation

1. Elderly on a fixed income

2. Renters who live in a rent controlled apartment

3. People who are paying on a loan with adjustable interest rates

4. Banks who are collecting on loans with adjustable interest rates

Who is harmed the MOST during periods of unexpected inflation?

• 1

• 1 and 3

• 1,2, and 3

• 2 and 4

Inflation is most harmful to

• debtors

• creditors

• wage earners

• property owners

Of the following groups, the one hurt MOST by unanticipated inflation is

• retirees who live on a fixed income

• workers with cost-of-living adjustment contracts.

• banks who have made short-term adjustable rate mortgages.

• people who have invested savings in variable rate returns.

Inflation that is sudden or unexpected tends to hurt which of these groups of people MOST?

• people who have a steady job

• people who have borrowed money

• people who have loaned money to others

• people who have investments in the stock market

Why might students be affected adversely by inflation?

• Teachers would lose their jobs.

• Students usually work for low wages.

• Many students would lose their jobs.

• School lunch costs would rise sharply.

Who benefits the MOST during periods of unexpected inflation?

• elderly on fixed incomes

• renters who live in a rent controlled apartment.

• banks who are collecting on loans with fixed interest rates

• banks who are collecting on loans with adjustable interest rates

Which of these groups would most likely gain from unanticipated inflation?

• individuals who work for minimum wage

• retirees who are getting a fixed income pension

• farmers who have borrowed money at fixed interest rates

• banks who have loaned their excess reserves at fixed interest rates

How does the CPI provide an accurate indication of inflation within a country?

• The CPI uses a calculation to indicate how consumers spend more money on inferior goods as income rises.

• The CPI involves the calculation of price changes in the purchase of luxury items to indicate inflation.

• The CPI measures the average change over time in the selling prices received by domestic producers for their output using start and end dates.

• The CPI measures urban household spending on a "market basket" in a calculation to see how the average prices of goods and services have changed over time.

How is inflation measured?

• RPI

• CPI

• RFI

• PRI