The group that tends to be most hurt by unexpected inflation is
A)banks.
B)individuals with unindexed pensions.
C)employers.
D)fixed-income earners.
E)both B and D are correct.

Question

Quizplus · Accepted Answer

Unexpected inflation results in a decrease in purchasing power of fixed-income earners and individuals with unindexed pensions because their incomes remain the same while the prices of goods and services increase. Therefore, option B and D are correct. Banks may be affected by unexpected inflation, but they can also adjust their interest rates accordingly to protect themselves. Employers may also be affected, but they have the ability to adjust wages and prices to account for inflation.

The Group That Tends to Be Most Hurt by Unexpected