Before he went to college,Jon bought a car from his brother Tony.They agreed that Jon would pay Tony $10,000 when Jon graduated from college.While Jon was at college,inflation was higher than expected.Thinking only about the car transaction,this unexpectedly high inflation was ________.

Question

Quizplus · Accepted Answer

Inflation reduces the real value of money over time, so the $10,000 Jon agreed to pay would be worth less in real terms by the time he graduated. This is advantageous for Jon, as he effectively pays less than initially agreed upon, but disadvantageous for Tony, who receives less in real value.

Before He Went to College,Jon Bought a Car from His