In Zimbabwe, inflation rose from an annual rate of 32 percent in 1998 to 100,000 percent in early 2009. Considering only the effects of this unexpected inflation, which of the following is most harmed by the inflation?
A)Businesses with large inventories
B)Businesses with large debts
C)Businesses with wages determined by long-term contracts
D)Businesses who had contracted to sell their services to others at fixed prices

Question

Quizplus · Accepted Answer

Businesses that had contracted to sell their services at fixed prices would be most harmed because the value of the money they receive would be significantly eroded by inflation, reducing their real income and profitability.

In Zimbabwe, Inflation Rose from an Annual Rate of 32