Saturday 4 June 2011

Inflation rate in Alfonland is 3,100% per year. Which of the following is an example of the cost of inflation?

a.A clothing store has to change the price tags more frequently on goods sold in the store.


b.People stop at the gas station each day to refuel, even if their cars%26#039; gas tanks are almost full.


c.There is an unintended redistribution of wealth from lenders to borrowers.


d.All three scenarios are correct.|||the answer is d.


It is a because stores would have to change their tags almost daily.


It is b because when people know that gas is going to cost more tomorrow they are more likely to buy more today, while it is cheaper.


It is c because borrowers end up owing less and less everyday, unless interest rate that the lenders charge is of 3,100%.