With fixed interest rates,unanticipated deflation hurts ________ because ________.
A)lenders; they get paid back in less valuable dollars
B)lenders; they get paid back in more valuable dollars
C)borrowers; they repay the loan in more valuable dollars
D)borrowers; they repay the loan in less valuable dollars

Question

Quizplus · Accepted Answer

With fixed interest rates, borrowers are locked into paying back the loan in dollars of the same value as when the loan was taken out. In the event of deflation, the value of money increases, meaning that borrowers are essentially paying back more valuable dollars than they borrowed. This hurts borrowers.

With Fixed Interest Rates,unanticipated Deflation Hurts ________ Because ________

With Fixed Interest Rates,unanticipated Deflation Hurts Because