Economics: The Basics 1st Edition by Mike Mandel

Exercise 7

Suppose the annual inflation rate has been 3 percent for several years. Then, without warning, it soars to 10 percent a year. Will each of the following individuals or businesses win or lose from such unexpected inflation?
a) A tenant renting an apartment with a lease that fixes the rent for the next three years.
b) An automobile dealer who has leased a car to a buyer for three years with fixed payments.
c) A bank that has lent money to a family to buy a home with interest rates fixed for the next 30 years.