krisha900Lv1

8 Apr 2023

FRQ # 2

 

Country Y is experiencing severe and unanticipated inflation.

 

1. Explain the effect of this inflation on each of the following.

1. A family With Savings in a Fixed-interest-rate time deposit account
2. A business repaying a long-term,fixed-interest-rate loan
   
   

1.  Identify one fiscal policy action that could be implemented to reduce inflation.
   
   
2. Identify an open-market operation that could be implemented to reduce inflation.
   
   
3. Suppose that Country Y continues to experience high inflation in the long run. Indicate the effect of this inflation on the nominal interest rate in Country Y.