If the Fed were to unexpectedly increase the money supply, creditors would gain at the expense of debtors.

Question

Quizplus · Accepted Answer

When the Fed unexpectedly increases the money supply, it typically leads to inflation or a decrease in the value of money, which benefits debtors as they can repay their loans with money that is worth less. Creditors, on the other hand, lose because the value of the repayments they receive has decreased.

If the Fed Were to Unexpectedly Increase the Money Supply