Luke has lent his friend Mitch some money; however,he underestimated the rate of inflation when they agreed to a repayment and interest schedule.Mitch will benefit from the inflation.

Question

Quizplus · Accepted Answer

Since the inflation will increase the value of the money Mitch has borrowed, he will end up paying back less in real terms than he borrowed. Therefore, Mitch will benefit from the inflation, and Luke will lose out.

Luke Has Lent His Friend Mitch Some Money; However,he Underestimated