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GCE Economics 1989 Question 35

Question 35

Money and Inflation

Inflation in any economy

  1. A.has no monetary connection
  2. B.implies a sustained decrease in the general price level
  3. C.always increases the value of the national currency
  4. D.tends to redistribute income arbitrarily
  5. E.tends to bring down market prices.
Show the answer and explanation

Answer: D (tends to redistribute income arbitrarily)

Explanation

Inflation helps debtors and owners of real assets and hurts creditors and fixed-income earners, redistributing income arbitrarily.