Suppose that people expect inflation to equal 6 percent, but in fact, prices rise by 4 percent. Indicate whether this unexpectedly low inflation rate helps or hurts each of the following groups or individuals. Helps Hurts The government A homeowner with a fixed-rate mortgage A union worker in the second year of a labor contract A college that has invested some of its endowment in government bonds that are not indexed Treasury bonds
Suppose that people expect inflation to equal 6 percent, but in fact, prices rise by 4 percent. Indicate whether this unexpectedly low inflation rate helps or hurts each of the following groups or individuals. Helps Hurts The government A homeowner with a fixed-rate mortgage A union worker in the second year of a labor contract A college that has invested some of its endowment in government bonds that are not indexed Treasury bonds
Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations
Section: Chapter Questions
Problem 11P
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Question
Suppose that people expect inflation to equal 6 percent, but in fact, prices rise by 4 percent.
Indicate whether this unexpectedly low inflation rate helps or hurts each of the following groups or individuals.
|
Helps
|
Hurts
|
|
---|---|---|---|
The government |
|
|
|
A homeowner with a fixed-rate mortgage |
|
|
|
A union worker in the second year of a labor contract |
|
|
|
A college that has invested some of its endowment in government bonds that are not indexed Treasury bonds |
|
|
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