Which of the following statements is true ?
A) Demand-pull inflation is caused by excess total spending.
B) Cost-push inflation is caused by an increase in resource costs.
C) If nominal interest rates remain the same and the inflation rate falls, real interest rates increase.
D) If real interest rates are negative, lenders incur losses.
E) All of the above.

Question

Quizplus · Accepted Answer

A) Demand-pull inflation is caused by excessive total spending, which creates a shortage of goods and services, leading to an increase in their prices.
B) Cost-push inflation is caused by an increase in resource costs, such as wages and materials, which increases the production costs, leading to an increase in the prices of goods and services.
C) Real interest rates are calculated by subtracting the inflation rate from the nominal interest rate. If nominal interest rates remain the same and the inflation rate falls, real interest rates increase.
D) If real interest rates are negative, borrowers benefit, while lenders incur losses since they receive less in interest than the inflation rate.

Which of the Following Statements Is True