Question

When the expected rate of inflation is higher than the actual rate of inflation, wealth is: A. not redistributed at all. B. redistributed from lenders to borrowers. C. redistributed at random. D. redistributed from borrowers to lenders.

Answer 1

Answer:

D. redistributed from borrowers to lenders.

Explanation:

• The inflation is the increase of the price levels of the goods and the services in the economy for a long time and shows a reduction in the purchasing power, a common measure is the price index.

• Very high rates of inflation are caused by the massive growth of the money supply the expected rate of inflation of wealth is measured by the distribution of the wealth of the borrowers to the lenders that create hoardings of prices and fluctuations in the real demands.