Who is most likely to be penalized by unanticipated inflation?
A) people who are saving
B) people who are borrowing
C) governments
D) people who are in high-growth industries in which wages are growing faster than prices

Question

Who is most likely to be penalized by unanticipated inflation?  
A) people who are saving 
B) people who are borrowing 
C) governments 
D) people who are in high-growth industries in which wages are growing faster than prices

Quizplus · Accepted Answer

People who are saving are most likely to be penalized by unanticipated inflation as the value of their savings will decrease in real terms. On the other hand, people who are borrowing will benefit from inflation as the value of their debt decreases in real terms. Governments may also be penalized by inflation as they may have to pay higher interest rates on their borrowing. People who are in high-growth industries in which wages are growing faster than prices may also be less affected by inflation as their income will increase at a faster rate than the cost of living.

Who Is Most Likely to Be Penalized by Unanticipated Inflation