When actual inflation is equal to expected inflation
A) borrowers are harmed and lenders benefit.
B) lenders are harmed and borrowers benefit.
C) taxpayers are harmed and governments benefit.
D) None of the answers is correct.

Question

Quizplus · Accepted Answer

When actual inflation is equal to expected inflation, there is no differential impact on borrowers and lenders, hence neither of them are harmed or benefit. Similarly, there is no direct impact on taxpayers or governments. Therefore, none of the given choices is correct.

When Actual Inflation Is Equal to Expected Inflation