Which of the following statements is NOT true?
A) Inflation measures the rate of change in the overall price level in the economy.
B) If inflation is higher than expected, then the borrowers who owe a fixed amount of money lose.
C) If inflation is higher than the growth of income, then the workers lose.
D) Menu costs are an example of the transaction costs that are associated with inflation.

Question

Quizplus · Accepted Answer

Inflation higher than expected generally benefits borrowers who owe a fixed amount of money, as they repay their debts with money that is worth less. This means the real value of the debt decreases, contrary to the statement in option B.

Which of the Following Statements Is NOT True