The classic loser from an unanticipated inflation is

Question

Quizplus · Accepted Answer

Unanticipated inflation reduces the purchasing power of money, which typically leads to nominal interest rates rising faster than expected. This means that savers who earn a fixed nominal interest rate will earn less real interest than they anticipated, as the increase in prices will erode the value of their savings. Therefore, option C is the correct answer, as savers are the classic losers in an unanticipated inflation. Option A is incorrect because a borrower who pays less nominal interest than expected would be a winner, not a loser, as they would effectively be paying back their loan with cheaper dollars. Option B is incorrect because a borrower who pays more nominal interest than expected would be adversely affected, but not necessarily a classic loser. Option D is incorrect because a saver who earns more real interest than expected would not necessarily be a loser either, as they have still earned a positive real interest rate.

The Classic Loser from an Unanticipated Inflation Is