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High and Uncertain Inflation Is Damaging to the Economy Because

Question 19

Multiple Choice

High and uncertain inflation is damaging to the economy because


A) there can be unexpected reallocations of real income between borrowers and lenders.
B) the price system is no longer capable of effectively signalling changes in relative scarcity through changes in relative prices.
C) there can be unexpected reallocations of real income between workers and firms.
D) individuals who receive their incomes in fixed nominal terms are made worse off.
E) all of the above.

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