Unanticipated inflation arbitrarily:
A)subsidizes those who receive fixed money incomes.
B)penalizes those who receive fixed money incomes.
C)penalizes those who borrow money.
D)benefits those who save money.

Question

Quizplus · Accepted Answer

Unanticipated inflation penalizes those who receive fixed money incomes because their purchasing power decreases. As prices rise, the fixed income they receive can buy fewer goods and services. On the other hand, those who receive adjustable incomes, such as wages adjusted for inflation, may see an increase in their purchasing power. Therefore, unanticipated inflation unfairly impacts those on fixed incomes.

Unanticipated Inflation Arbitrarily