People who have borrowed money from banks at a fixed rate of interest will most likely:
A)experience losses if the inflation rate is higher than anticipated.
B)benefit if the inflation rate is lower than anticipated.
C)experience a rise in their real interest rate.
D)benefit if the inflation rate is higher than anticipated.

Question

Quizplus · Accepted Answer

When inflation is higher than anticipated, the real value of the money that borrowers repay is less than expected, benefiting those who have borrowed at a fixed interest rate.

People Who Have Borrowed Money from Banks at a Fixed