When inflation is higher than expected, there is redistribution from:
A)borrowers to the government.
B)lenders to the government.
C)lenders to borrowers.
D)borrowers to lenders.

Question

Quizplus · Accepted Answer

When inflation is higher than expected, the real value of money decreases, meaning the real value of the debt decreases. This benefits borrowers, who have to pay back less in real terms, and disadvantages lenders, who receive less in real value.

When Inflation Is Higher Than Expected, There Is Redistribution From