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Before discussing the effect of deflation and inflation on the distribution of income, it will be useful to define these terms.
Before discussing the effect of deflation and inflation on the distribution of income, it will be useful to define these terms.
admin
2010-06-11
26
问题
Before discussing the effect of deflation and inflation on the distribution of income, it will be useful to define these terms. By inflation we mean a time of generally rising prices of goods and factors of production, such as wages and rents. By deflation we mean a time when most prices and costs are falling. Neither in inflation nor in deflation do prices all move in the same direction or in exactly the same proportion. As a result of changes in relative prices and in total spending, the two processes of inflation and deflation cause definite and characteristic changes in the distribution of income among economic classes.
Unforeseen inflation tends to favor debtors and profit receivers at the expense of creditors and fixed-income receivers. Suppose, for example, you lend $1,000 today and me paid back one year from now. If in the meantime prices have doubled, then your debtor will be paying back only one half as much real purchasing power as you gave him Or consider an American who was earning a fixed rate of 6% yearly on a mortgage prior to World War Ⅱ. After 1939 he found that, as a result of inflation caused by World War Ⅱ, he was not even holding his own as far as real purchasing power of the dollar was concerned. On the other band, one who invests in real estate, in common stocks, or in commodities makes a great profit dining times of unforeseen inflation, when the volume of business sales increases greatly, as do prices, between the time that businesspersons buy and sell their merchandise, fixed or overhead costs remain the same; other costs rise, but not so rapidly as prices. For all these reasons, profits increase--often faster than the cost of living.
In times of deflation, the situation is reversed Creditors and fixed-income receivers tend to gain at the expense of debtors and profit receivers. If prices fall between the time that a creditor lends money and is repaid, then he gets back more purchasing power than he lent. Between the time that a merchant buys and sells goods, he will have to take a loss. The school teacher who keeps his jobs and whose pay is not cut, however, finds that his real income has increased. Likewise, a hoarder who earns no interest on the money she keeps hidden finds the real value of her wealth increasing everyday as prices fall. If prices fall at the rate of 10% a year, she is being rewarded for her antisocial act of hoarding at a 10% rate of interest in real terms, while the businessperson who gives someone a job may find that he can’t even get back his outlay, much less earn a profit.
Mr. Smith borrows $500 now and pays file money hack next year when prices have doubled, then how much will he be paying back in terms of real purchasing power measured by the money value of this year?.
选项
A、$500.
B、$250.
C、$1000.
D、$750
答案
D
解析
本题是推论题。根据本文第二段的第二、三句“Suppose,for example, you lend $1,000 today and are paid back one year from now.If in the mean time prices have doubled, then your debtor will be paying back only one-half as much real purchasing power as you gave him”的句意与推算,答案应为D。
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0
大学英语六级
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