Select the correct answer using the code below
A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only
D. 1,2 and 3
Answer:D
Select the correct answer using the code below
A. 1 and 2 only B. 1 and 3 only C. 2 and 3 only D. 1,2 and 3
Explanation: Inflation redistributes wealth from creditors to debtors i.e.. lenders suffer and borrowers benefit out of inflation the opposite effect takes place when inflation falls (i.e.. deflation) Holding money does not remain an intelligent economic decision (because money loses value with every increase in inflation) that is why people visit banks more frequently and try to hold least money with themselves and put maximum with the banks in their saving accounts This is also known as the shoe leather cost of inflation (as it consumes the precious time of the people visiting the bank frequently tagging their shoe) It means that saving rate increase But this happens as a short term effect of inflation In the long-fun higher inflation depletes the saving rate in an economy Just the opposite situation arises when inflation falls or shows falling traits with decreasing saving in the short-run and increasing saving in the long-run, respectively