Which of the following individuals would be most negatively affected by 'anticipated inflation'?
A)A retired railway engineer who receives a fixed income payment every month.
B)A union contractor whose pay is adjusted based on changes in the CPI.
C)A full-time employee at a pizza shop who earns more than the minimum wage.
D)A student who borrows $10 000 at a nominal interest rate of 5% to finance educational expenses.

Question

Quizplus · Accepted Answer

Anticipated inflation refers to inflation that is expected to occur in the future. In this case, the retired railway engineer would be most negatively affected because they receive a fixed income payment every month. As prices increase due to inflation, their fixed income payment will not increase, causing a decrease in their purchasing power. The other options listed have some form of protection against inflation, whether it be union pay adjustments, earning above minimum wage, or the ability to pay off borrowed funds with inflated dollars.

Which of the Following Individuals Would Be Most Negatively Affected