A Pure Price change occurs when:

A. when inflation increases the cost of an item.

B. when technology and quality improve an item.

C. when inflation exceeds expected inflation rates.

D. with unanticipated inflation

A. when inflation increases the cost of anitem.B. when technology and quality improve
an item.C. when inflation exceeds expected inflationrates.D. with unanticipated inflation

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Vaishnavi KanukurtiLv10

17 Oct 2020

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Related questions

Why are economists concerned about inflation?

a. Inflation generally causes unemployment rates to rise.

b. Real GDP is necessarily falling when there is inflation.

c. Inflation lowers the standard of living for people whose income does not increase as fast as the price level.

d. Inflation increases the value of peoples' saving and encourages overspending

ivorycricket54

How would I respond to this post below. I just need something very short.

If I had a fixed 30-year mortgage and the economy experienced unanticipated inflation,the borrower would be the winner and the lender would be the loser in the given scenario. The reason being is if a society experiences unanticipated inflation, individuals and institutions will change their behavior. For example, potential homeowners will not be able to borrow from banks at fixed rates of interest, but will be required to accept loans whose rates can be adjusted as inflation rates change. Banks do not want to lend money at a fixed interest rate if there is a strong likelihood that inflation will erode the real value of the income stream they expected. However, if banks become reluctant to make loans with fixed interest rates, this imposes more risk on homeowners. In this scenario the fixed loan was made prior to the unexpected inflation sodebtors will gain at the expense of creditors. Creditors, on the one hand, will lose because inflation will erode the amount of money they planned to earn on the loans. Since the loans have already been made, there