When actual inflation is less than expected,wealth is transferred from the borrower to the lender.

Question

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When inflation is less than expected, the value of money increases. This means that the purchasing power of the money borrowed decreases, and the borrower ends up paying back less in real terms than they had anticipated. This results in a transfer of wealth from the borrower to the lender, as the lender benefits from receiving the money back with a higher value than when it was lent out.

When Actual Inflation Is Less Than Expected,wealth Is Transferred from the Borrower