If the inflation rate is lower than expected,real income is redistributed from lenders to borrowers.

Name: If the inflation rate is lower than expected,real income is redistributed from lenders to borrowers.
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Question

Quizplus · Accepted Answer

When the inflation rate is lower than expected, borrowers benefit because they repay loans with money that is worth more than anticipated, while lenders receive less purchasing power than expected. Thus, real income is redistributed from borrowers to lenders, not the other way around.

If the Inflation Rate Is Lower Than Expected,real Income Is