High and unexpected inflation has a greater cost

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1. High and unexpected inflation has a greater cost

A. for those who hold a little money than for those who hold a lot of money.

B. for those who borrow than for those who save.

C. for savers in high income tax brackets than for savers in low income tax brackets.

D. for those whose wages increase by as much as inflation than for those who are paid a fixed nominal wage.

2. If a bank uses $500 of excess reserves to make a new loan when the reserve ratio is 8 percent, this action by itself initially makes the money supply

A. increase by $500 while wealth does not change.

B. and wealth increase by $500.

C. decrease by $500 while wealth decreases by $500.

D. and wealth decrease by $500.

Reference no: EM131392984

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