If the actual rate of inflation is less than the rate expected during a period,
A) borrowers benefited at the expense of lenders.
B) lenders benefited at the expense of borrowers.
C) both borrowers and lenders benefited.
D) neither borrowers nor lenders benefited.

Question

Quizplus · Accepted Answer

If the actual rate of inflation is less than expected, lenders benefit because the money they are repaid has more purchasing power than anticipated, while borrowers pay back loans with money that is worth more than expected.

If the Actual Rate of Inflation Is Less Than the Rate