Economics 201 Final Exam Study Guide: Econ 201 Final Exam Study Guide: Questions & Answers: Updated Solution

Which of the following statements is false with regard to fixed interest rate loans? a. any of the other two could be correct b. debtors prefer inflation to be higher than expected during the life of a loan c. lenders prefer inflation to be higher than expected during the life of a loan (Ans- c. lenders prefer inflation to be higher than expected during the life of a loan Which of the following best describes a period of disinflation? a. price stability is occurring b. inflation is occurring c. hyperinflation is occurring d. deflation is occurring (Ans- b. inflation is occurring Unexpected inflation tends to benefit:a. lenders b. debtors c. retired workers d. suppliers (Ans- b. debtors A current value of 125 for the CPI means that, on average: