During inflationary times,which of the following is unlikely to happen?
A)People change their expectations about the inflation rate.
B)Workers try to get increases in nominal wages.
C)People are willing to lend money for longer periods.
D)Relative price changes become harder to recognize.
E)People buy physical assets as a hedge against rising prices.

Question

Quizplus · Accepted Answer

During inflationary times, people have expectations that the inflation rate will continue to rise, and therefore they do not lend money for longer periods. Instead, they invest in physical assets that can serve as a hedge against rising prices. Workers try to get increases in nominal wages to keep up with inflation, which makes relative price changes more noticeable. Therefore, the given option (C) is unlikely to happen.

During Inflationary Times,which of the Following Is Unlikely to Happen