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Higher Rates of Inflation Reduce Planned Spending Because

Question 108

Multiple Choice

Higher rates of inflation reduce planned spending because:


A) the Fed reacts to the higher inflation by lowering interest rates.
B) the reduction in wealth, resulting from the reduced real value of money, restricts spending.
C) resources are redistributed from low-spending households to high-spending households.
D) the real value of money increases.

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