Which of the following is true about inflation?
A) Inflation promotes social harmony by uniting people against the government.
B) Inflation is more damaging if it is anticipated.
C) Accurate anticipation of inflation is possible for everyone who is well informed about economic events.
D) Those who lend money at a rate below the rate of inflation suffer economic losses.
E) If people accurately anticipate inflation, their actions will prevent it.

Question

Quizplus · Accepted Answer

When inflation occurs, the purchasing power of money decreases, meaning that lenders who receive repayment of the loan with less valuable money suffer economic losses. Therefore, those who lend money at a rate below the rate of inflation suffer economic losses. The other answer choices are not accurate statements about inflation.

Which of the Following Is True About Inflation