Question

hich of the following explains why redistribution occurs during inflation?

a) Rising prices fail to signal desirable changes in the mix of output.

b) Because all prices do not change at the same rate, people buy different combinations of goods and services and own different combinations of wealth.

c) Relative prices remain unchanged.

d) All loans are indexed to inflation

Answer 1

b) Because all prices do not change at the same rate, people buy different combinations of goods and services and own different combinations of wealth.