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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Explain whether the following statements are true, false, or uncertain.

a. “Inflation hurts borrowers and helps lenders, because borrowers must pay a higher rate of interest.”

b. “If prices change in a way that leaves the overall price level unchanged, then no one is made better or worse off.”

c. “Inflation does not reduce the purchasing power of most workers.”

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Subpart (a):

To determine

Verifying the statements concerning inflation.

Explanation

The given statement is false. Higher expected inflation only increases the nominal interest rate, while the real interest rate remains the same. So, the borrowers are not worse off and the lenders ...

Subpart (b):

To determine

Verifying the statements concerning inflation.

Subpart (c):

To determine

Verifying the statements concerning inflation.

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