1) Answer these three sub-parts a) If an economy’s price level increases from year to year, its money supply likely also increases from year to year. (True or False) b) ) If a central bank creates new...

1) Answer these three sub-parts

a) If an economy’s price level increases from year to year, its money supply
likely also increases from year to year.
(True or False)

b) ) If a central bank creates new money and lets the government spend it, those who already hold money experience a decrease in the purchasing power of their money. This is called an inflation ______________________.

c) Which of the following costs of inflation occurs only when inflation is not correctly anticipated by borrowers and lenders?
(shoe leather costs; menu costs; increased tax burdens on income from saving; arbitrary redistributions of purchasing power)