Reference no: EM133253740

Assignment:

1. Which of the following statements about re-distributional effects of inflation is INCORRECT?

a. Rapid inflation is one major macroeconomic problem, which must be completely eliminated by government and central bank.

b. Higher-than-anticipated inflation driven by a monetary expansion would redistribute wealth from the poor to the rich, thereby exacerbating inequality.

c. The early recipients of the new money benefit at the expense of the late receivers because the former see their income increase before prices increase for all the goods they buy; vice versa.

d. Lower-than-anticipated inflation driven by a monetary contraction would redistribute wealth from the rich to the poor, thereby reducing inequality.

2. Which of the following statements about the relationship between education and inequality is INCORRECT?

a. In the long run, education is an important income equalizer because low income families can be more easily acquire human capital through education than accumulate physical or financial capital through savings or inheritance.

b. In the short run, education itself may be a source of inequality because different education opportunities between rich and poor.

c. In the short run, education itself may be a source of inequality because brain drain (to cities and coastal areas) reduces regional inequality.

d. In the long run, education is an important income equalizer because the expansion of human capital accumulation involves dispersion of knowledge and skills across the wider population.