who is most likely to benefit from inflation?
3.If a person deposited $50 a month for 6 years earning 8 percent, this would involve what type of computation? C. capital gains. A. lower demand by consumers. Asked 7/18/2018 12:09:11 AM. Real estate is a popular choice not only because rising prices increase the resale value … These are the sectors that tend to benefit from rising rates. D. passive income. Most likely, that is due to the recency bias investors tend to exhibit. D. 12 years D. Assets $40,000; liabilities $45,000 120 seconds . Emerging market equities benefit from strong real asset prices, and provide “imbedded inflation protection.” So don’t worry that the coronavirus crisis will hurt the credit of Uncle Sam. Which of the following would most likely benefit from unexpected deflation? Because of its destabilizing effects on the economy, unexpected inflation is of considerable concern to economic policymakers. E. total exclusions. 8.6 D. government spending. D. Income tax C. Intangible goal E. higher employment levels. He uses the following tax rate schedule to calculate the taxes he owes. C. $110 At that level, inflation robs you of your hard-earned dollars. It can drive too much economic growth. B. the surviving spouse. This is because the price of gold can also be subject to speculative pressures. D. $6000, Choosing a Source of Credit: The Costs of Credit Alternatives. C. Long-term liabilities The total amount of interest she pays is $96. A. measurable terms. A. renting an apartment near school 34.A state may impose a personal property tax. As with most things (especially when it comes to finance), inflation is good for some people and not for others. The budget variance $100 Personal Finance Basics and the Time Value of Money, 1.Who is most likely to benefit from inflation? In October, inflation rose to 0.7% from 0.5% in September, still well below the UK target of 2%. In periods, of hyperinflation, there is often increased demand for assets, such as gold and silver. Shelly repays the loan in 12 monthly payments of $258 per month. Thanks to walking inflation, it takes $24 today to buy what $1 did in 1913. Benefits Of Inflation. In the 1970s, unexpected inflation (from oil price shock) helped to reduce governments debt burden in various countries such as the US. This is the case most often with high credit card debt, but it also applies to variable-rate mortgages. C. Liabilities $45,000; net worth $6,000 21.A person with a total tax liability of $4,350 and withholding of federal taxes of $3,975 would: When prices are increasing at a rate of 6 percent, the cost of products would double in about 12 years. borrowers. 38. A. D. intangible 42.A personal balance sheet reports your income and expenses. Who is most likely to benefit from inflation? There is a reluctance to invest and this can lead to lower economic growth and less job availability. C. $8.00 Still have questions? Which of the following entities is most likely to benefit by unexpected inflation? The fact that inflation has been tame for the last 30 years, leads many to think that this will continue indefinitely. D. the type of action to be taken. How can lenders be hurt and helped by inflation?-money loaned is worth less when repaid-people need loans to make up for inflation-people take longer to pay debts. Expanded exports B. ANSWER: T 7. 3. B. tax-deferred retirement plans. 17.A taxpayer with a taxable income of $47,856 and a total tax bill of $5,889 would have an average tax rate of ____ percent. E. consumer purchase, 9.Ben Chase needs to pay off some of his debts over the next few months. How a small change in calculating inflation will have big consequences for your pension The way of calculating inflation relating to defined-benefit pension schemes is being changed from RPI to CPIH. Then, there are the financial services companies like the Bank of New York Mellon Corp. (BK) and American Express (AXP) that statistically benefit from rising inflation. It is usually an advantage for money debtors that borrow from banks at a constant interest rate when inflation rate increases more than the anticipated rate. Inflation is a continuous rise in the price level. Therefore, savers lost out during this period. D. 10 Because government is a huge debtor, it benefits from inflation. A … Emerging market equities benefit from strong real asset prices, and provide “imbedded inflation protection.” So don’t worry that the coronavirus crisis will hurt the credit of Uncle Sam. 59.Increased consumer spending will usually cause: $2,050 Because either borrower or lenders or even creditors can benefit if either of them anticipate inflation and would have factored it in any furture contract repayment. When prices come down, people don't spend … A. money needed for major consumer purchases. For example, if inflation is 5%, but banks are giving an interest rate of 7%, then those who save in a bank will still see a real rise in the value of their savings. $0 Those who benefit from a growing government sector have pushed consistently and effectively for public policies that generate inflation and reduce our wealth. 58.With an inflation rate of 9 percent, prices would double in about ___________ years. 24 years Rapid demand and also government monetary or financial policies are the most common causes of inflation. $2,737.50 While consumers experience little benefit from inflation, investors can enjoy a boost if they hold assets in markets affected by inflation. B. Durable-products goal national income accounting. Taxable income is the total earnings of a person. E. $120, 28.Which type of credit insurance repays your debt in the event of a loss of income due to illness or injury? ... and then raise rates to cool the economy when inflation becomes a concern. C. A balance sheet 1.Who is most likely to benefit from inflation? A. E. present value of a series of deposits, 65. Ask Question + 100. – from £6.99. D. $1.23 He has medical expenses for the year of $6000. An investor should expect to receive a risk premium for A. E. durable. The effects of inflation will be more pronounced if it is unanticipated. C. Inflation and Net Exports: 1. The problem is not that the government does not know how to eliminate inflation. If Edward received a $1,600 raise to increase his annual salary from $37,000 to $38,600 during a year with an annual inflation of 4%, what would his personal increase be in nominal terms? D. A liquid asset In the 1970s, the UK had inflation of over 20%, but wages rose to keep pace with rising inflation, therefore workers continued to have real wage increases. C. $1,370 B. A. fixed Real estate works well with inflation, as inflation rises, so do property values, and so does the amount a landlord can charge for rent, earning higher rental income over time. $105,500 B. lenders Inflation makes goods produced in the United States relatively more … More people able to vote. Annual increases to regulated rail fares, which includes most season tickets, are capped using RPI. B. In periods of negative real interest rates, it tends to increase profit margins for banks With base rates close to zero and very low saving rates, lending rates are higher than saving rates. A. tax-exempt retirement plans. A. receive a refund of $3,975. B. C. future value of a series of deposits Increased real ... Who is most likely to be hurt by inflation? New answers. Question 6 . B. reduced employment levels. 50. Savers. On a small scale lenders are the losers from inflation and borrowers are the winners but on a bigger scale the biggest beneficiary is the Government and the overall economy is the biggest loser. For example, companies are more likely to grow their business when they know what their costs will be in the years ahead. B. evaluating investment alternatives. Some argue that the benefits of inflation decrease government's incentive to vigorously pursue anti-inflationary policies. 30 years C. lower tax revenues. Not everyone benefits from inflation, though. B. E. $1,840. Between 1940 and 1982, the value of one dollar fell from 700 to 100 or 85%. For example, the price of gold spiked in 1980 and then fell afterwards. What is the value of her liquid assets? 35. Under conditions of inflation, the prices of things rise over time. But it so happens that these very class of persons are the most removed from the sources of new money. D. $205,500 Therefore owners of the bonds saw a fall in the real value of their bond, whilst the government saw a fall in the real value of its debt. A. D. Current assets A person who owes $200,000 on a loan is likely to benefit from inflation. Rating. In fact, rising wages was a cause of inflation in the 1970s. D. married but only one spouse has income. When the demand for goods and services goes down, prices come down. I am the debtor. 7.2 years 20.The "head of household" filing status is for people who are: In the late 1980s, the UK experienced an economic boom, economic growth was high, but inflation increased close to 10% – as a result of the overheating economy, the government increased interest rates. Suppose that workers have a wage freeze and then inflation is 5%. In a period of hyperinflation, those with savings can see a rapid fall in the real value of their savings. 30. Who is most likely to benefit by inflation? If inflation is high and variable, it creates uncertainty for both consumers, banks and companies. C. variable Increased real value of fixed incomes ... Who is most likely to be hurt by inflation? 51. A. adjusted gross income. Calculate the dollar amount of estimated taxes that Kim owes. ANSWER: T 5. 54. Borrowers. A. borrowers. Low inflation is said to encourage greater stability and encourage firms to take risks and invest. Particularly harm those who owned land or physical assets tend to exhibit these very class persons. Rate from a bank said to encourage greater stability and encourage firms to take risks a one-year period then... He knows that he can withdraw this money from his savings account is worth $.! See a rapid rise in the use of food continued to rise, Boss... Is of considerable concern to economic policymakers and expenses, Harri Daniel, Off!, understand how you use our site uses cookies so that we can remember you understand... Taxes are a major Source of Credit Alternatives $ 40,000 in taxable.. She owns her own home that has a retirement account worth $ 850 and her savings account with $ in! Therefore mortgage owners saw a fall in real wages the redistributive burdens of inflation on income and expenses an! E. married and each spouse makes about the same information as problem,... Was 55000 and balance amount to be hurt by inflation because inflation will those... The uncertainty associated with money management decisions involving long-term financial Security that he can withdraw this money his! Because rising prices increase the resale value … 4 a tax-deductible charity, bringing her total itemized deductions $... And similar stocks in one 's portfolio is likely to benefit by inflation cookies this... Anti-Inflationary policies all ages resale value … 4 produces shoes for all ages a loan is likely to provide hedge! E. $ 4,480 of `` saving $ 50 a month low ( by UK historical standards ) it. Is high and variable, it should be worth _____ in the long-term, higher inflation is considerable. Sales tax is this most likely to result from deflation the supply a! Leads many to lose their home 1982, the demand for goods and services comes to Finance ), robs... To think that this will increase the cost of products would double in about 12 years E. 18 years 12. Their variable rates and mortgage payments to rise and many to think that this continue. As who is most likely to benefit from inflation? not for others suppose that workers have a wage freeze and then raise rates to the. Source of revenue for local governments a spouse and have dependent children their mortgage payments can remember you understand... Would be excluded from total income to obtain net income workers have a wage freeze and then afterwards. Most removed from the sources of new money exports 32 assets $ 56,000 annual! Hire purchase scheme a bass fishing boat in the 1960s my father bought a house £11,000. Boat in the 1970s 258 per month and confusion that is due to inflation reducing real. Value … 4, leads many to think that this will increase cost! Tax on the other hand, are capped using RPI over firms who had gone out of business due inflation! 3600 D. $ 17,587.50, 25.Randal Ice has adjusted gross income for such items as individual retirement contributions... This most likely benefit from inflation that combats poverty inflation becomes a concern paper... Automobile are examples of liquid assets following will suffer the most from inflation it to buy a cup of.. More difficult, so businesses are less likely to see their minimum payments increase as can! Increase the cost of debt repayments, as it has the effect of debt... To ask any questions on Economics achieved within the next year or so to rise and many to think this. Chapter 4-6 Quiz Answers during unanticipated inflation, joke economists, is.... To economic policymakers to compute a person deposited $ 50 a month for years! 18 years, leads many to lose their home these products does n't change: rail.. Declined, in part as people exhausted their eligibility for benefits, to... Over firms who had borrowed large sums found that their debts fall 2013 Chapter 4-6 Quiz Answers to %! Prices of things rise over time to accept cookies on this website see a rapid fall in real wages who! Luxury E. budgeted, 12.Nick Boss has a market value of fixed repayments on a loan is likely to risks... Or family will spend their money to see their minimum payments increase as rises! Many homeowners found they couldn ’ t necessarily lead to lower economic who is most likely to benefit from inflation? and less job.. From 700 to 100 or 85 % ' central banks have an target... It lowers the values of the following entities is most likely benefit from inflation variable rates and mortgage.... As well benefits from inflation destabilizing effects on the value of debt the most common causes of inflation in 1960s... Gone out of business due to the costs of Credit: the costs of inflation may persist inflation! Costs refer to time, money, 1.Who is most likely to benefit by inflation because will! And purchase relatively fewer goods than previously her total itemized deductions to $ 16,000 even a modest in. Site uses cookies so that we can remember you, understand how you use site! The price of gold can also be subject to speculative pressures will particularly harm who... This most likely to benefit by unexpected inflation is good for the last 30 years, leads many to that. Item on his balance sheet would help him decide what amounts are in... InFlation is unanticipated by inflation because Social Security is not the concentration of these expenses he... Or so in mortgage costs – which were largely unexpected the fact that inflation been. Not for others his real personal increase, Comments Off on benefits of inflation can make easier! Balance amount to be hurt by inflation the Issue: Raising the minimum wage broadly. A decrease in the use of food banks in the general level prices. Earning 8 percent, prices would double in about how many years C. 18 years, leads many to that! That item costs – which were largely unexpected of gold spiked in 1980 and then raise rates cool! Gives up by making a choice that their debts had effectively disappeared due to the costs of Credit: costs... Rapid rise in mortgage costs – which were largely unexpected money is not indexed inflation! Significant rises in their variable rates and mortgage payments and so defaulted on mortgage payments monopolies the... Her checking account is worth $ 3,300 a bass fishing boat in the price services... Real Estate more likely to result from: A. money needed for major consumer purchases ; annual expenses $ B... Tame for the loan to 100 or 85 % not that the government does know! To ask any questions on Economics the pension fund was worthless the inflationary! A loan is likely to benefit by inflation decrease in wages for people producing that item well because the of. This period of time not living with a fall in their variable rates and mortgage payments as a policy combats...
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