A retired worker receives a pension that is not indexed to inflation. Which of t

Question

A retired worker receives a pension that is not indexed to inflation. Which of the following will happen if the rate of inflation rises? A. The retiree will be better off. B.The retiree's purchasing power will fall. C.The shareholders of the firm in which he worked will lose. D.The retiree's purchasing power will increase.

Assuming all else equal, what is likely to happen to the demand curve for reserves in an economy if it goes through a period of rapid expansion?

A.There will be a n upward movement along the demand curve for reserves.

B.The demand curve for reserves will shift to the left.

C.There will be a downward movement along the demand curve for reserves.

D. The demand curve for reserves will shift to the right.

Explanation / Answer

Ans: B. The retiree's purchasing power will fall.

The cost of living will increase due to inflation, but the pension is not increasing according to that.

2. Assuming all else equal, what is likely to happen to the demand curve for reserves in an economy if it goes through a period of rapid expansion?

Ans: A. There will be a n upward movement along the demand curve for reserves.

If the reserve increases, the money supply will reduce then interest rate will increase and the demand for money will decrease.

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