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  3. In addition to redistributing incomes, inflation may affect the total real income and production of the community. An increase i

In addition to redistributing incomes, inflation may affect the total real income and production of the community. An increase i

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问题     In addition to redistributing incomes, inflation may affect the total real income and production of the community. An increase in prices is usually associated with high employment. In moderate inflation, industries are operating efficiently and output is near capacity. There is a great deal of private investment and jobs are plentiful. Such has been the historical pattern. Thus many business persons and union leaders, in evaluating a little deflation and a little inflation, consider the latter to be the lesser of two evils. In mild inflation, the losses to fixed-income groups are usually less than gains to the rest of the community. Even worker with relatively fixed wages are often better off because of improved employment opportunities and greater take-home pay, a rise in interest rates on new securities may partly compensate for any losses to creditor, and increases in pension benefits may partly make losses to retirees.
    In deflation, on the other hand, the growing unemployment of labor and capital causes the community’s total well-being to be less; so in a sense, the gainers get less than the losers lose. As a matter of fact, in a depression, or a time of severe deflation, almost everyone suffers, including the creditor who is left with uncollectible debts.
    For these reasons as increase in consumption of investment spending is considered good in times of unemployment, even if this tends to increase prices slightly. When the economic system is suffering from severe depression, few people will criticize private or public spending on the ground that this might be inflationary. Actually, most of this increased spending will increase production and create jobs. once, full employment and full plant capacity have been reached, however, any further increases in spending are likely to be completely wasted in prices increase.
Which of the following happens if there is mild inflation?
选项 A、Everyone loses because of the increase of prices.
B、Retired people do experience any influence.
C、Creditors gain rather than lose with a rise in interest rates.
D、Some people gain more while other lose.
答案D
解析 本题的依据句是“In mild inflation，the losses to fixed-income groups are usually less than gains to the rest of the community．”从中可知D项为正确答案。
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