Generally speaking,which of the following groups would tend to gain real income from the wealth effects of inflation?
A) People who purchase long-term bonds when interest rates are low
B) People who have passbook savings accounts
C) People who own assets that are appreciating faster than the inflation rate
D) People who hold all of their assets in the form of cash

Question

Quizplus · Accepted Answer

People who own assets that are appreciating faster than the inflation rate would tend to gain real income from the wealth effects of inflation. This is because inflation can cause the value of assets such as real estate, stocks, and commodities to increase, leading to a higher return on investment. The other options, such as holding all assets in cash or having passbook savings accounts, would not necessarily provide a real gain in income due to inflation. Long-term bonds may also lose value if interest rates rise.

Generally Speaking,which of the Following Groups Would Tend to Gain