In countries where inflation is high and volatile, partial protection from the cost of inflation can be provided by
A. the indexation of debt
B. wage indexation
C. cost-of-living adjustments
D. all of the above
E. none of the above
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People should be concerned about imperfectly anticipated inflation since
A. it results in a redistribution of wealth
B. debtors tend to profit while creditors tend to lose
C. equity holders experience a loss in the real value of fixed dividends
D. they may move into higher tax brackets as nominal wages are adjusted for inflation
E. all of the above
If you had owned a ten-year Treasury bond from 2000 to 2009, what would have been your real rate of return?
A. 0.001
B. 0.009
C. 0.019
D. 0.026
E. 0.062
If you lost $1,000 in cash in 2000 and found it again in 2009, the real purchasing power of this cash would have changed by
A. -0.062
B. -0.038
C. -0.032
D. -0.026
E. -0.018
If your parents promised to give you $1,000 in cash every Christmas for the next 30 years, what would be the real purchasing power of the final $1,000 if the average annual inflation rate over this time period is 3 percent?
A. 820
B. 640
C. 520
D. 410
E. 320