Which of the following individuals would be most negatively affected by anticipated inflation?
A)a retired railroad 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 parlour who makes more than the minimum wage
D)a student who borrows $10,000 at a nominal interest rate of 5% to finance educational expenses
E)a financial manager who gets paid a percentage of the money they manage

Question

Quizplus · Accepted Answer

A retired railroad engineer who receives a fixed income payment every month would be most negatively affected by anticipated inflation because the purchasing power of their fixed income would decrease as prices increase.

Answer: D 
 The student who borrows $10,000 at a nominal interest rate of 5% to finance educational expenses would also be negatively affected by anticipated inflation because inflation would decrease the value of the money borrowed, but they would still have to pay back the loan amount plus interest at a fixed rate.

Which of the Following Individuals Would Be Most Negatively Affected