Cost-push inflation results in

a lower equilibrium price and lower economic output.

lower economic output and no change in prices.

a higher equilibrium price and lower economic output.

a higher equilibrium price and higher economic output.

a lower equilibrium price and higher economic output.

Cost-push inflation occurs

when actual prices exceed real prices.

when the government prints too much money.

when household expenses are higher than expected.

when business costs lead to higher economic output.

when higher production costs push up prices.

57. Which of the following is not an example of cost-push inflation?

higher production costs

higher wages

favorable supply shocks

oil shocks

rising cost of raw materials

Economists illustrate stagflation as

an increase in aggregate demand.

a decrease in the aggregate demand curve.

an increase in the long-run aggregate supply curve.

a decrease in the short-run aggregate supply curve.

an increase in the short-run aggregate supply curve.

59. Which of the following groups of people will benefit from unexpected inflation?

consumers

savers

debtors

creditors

fixed income investors

http://education-portal.com/academy/lesson/effects-of-inflation-on-suppliers-and-demanders.html#qz

Anticipated inflation is a sustained increase in the price level that is expected ahead of time. Unanticipated inflation is a higher-than-expected sustained increase in the price level; in other words, prices are going up faster than what was expected. Unanticipated inflation hurts savers and creditors because the money that they lend out gets paid back in cheaper dollars over time. Unanticipated inflation helps borrowers and debtors because they borrow money at a fixed rate and pay it back in cheaper dollars over time. Finally, unanticipated inflation redistributes wealth from savers to borrowers.

Alyson is a retired woman living entirely on Social Security income, so that's how she gets her money every month. The check comes in the mail from Social Security, she puts it in her bank account and that's what she lives on. Is she hurt or helped when she finds out that inflation is actually 5% when we were expecting 3%? Social Security is like a savings account in that it pays fixed income payments over time to individuals. That means she would be considered a saver, and we know that savers are hurt by unanticipated inflation. When she receives the same fixed payment over time, it will actually be worth less and less in terms of the goods and services it will afford her. Unfortunately, Alyson is going to be quite sad at the party!

Frank (is a farmer) borrowed money to buy a new tractor. Therefore, is Frank going to be hurt or helped? We know that borrowers are helped by unanticipated inflation, so this farmer benefits because his monthly payments on the tractor he borrowed the money to buy will actually be worth less and less. He'll be paying back his loan in cheaper dollars. So that means that at the party, Frank's going to be very happy.

60. A retired woman lives entirely on Social Security income, while a farmer borrows money to buy a new tractor. Which of the following statements is true?

inflation hurts the farmer and the retiree

inflation hurts the bank but helps the farmer and the retiree

inflation helps the bank but hurts the farmer and the retiree

inflation helps the farmer but hurts the retiree [r:ta:ə'ri:]

inflation helps the retiree but hurts the farmer

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