Unanticipated inflation helps lenders and hurts borrowers.

Name: Unanticipated inflation helps lenders and hurts borrowers.
Brand: Quizplus
Rating: 4.8 (54 reviews)

Question

Quizplus · Accepted Answer

Unanticipated inflation hurts lenders and helps borrowers. This is because lenders lend money at a fixed interest rate, assuming a certain level of inflation. If inflation is higher than anticipated, the real value of the money they receive back is lower. On the other hand, borrowers benefit from inflation because the real value of the money they borrowed decreases over time.

Unanticipated Inflation Helps Lenders and Hurts Borrowers