Under which of the following conditions is wealth distributed from debtors to creditors?
A)When inflation is high, but expected.
B)When inflation is low, but expected.
C)When inflation is unexpectedly high.
D)When inflation is unexpectedly low.

Question

Quizplus · Accepted Answer

When inflation is unexpectedly low, the real value of money increases, benefiting creditors who receive payments that are worth more than anticipated, while debtors pay back loans with money that has more purchasing power than expected.

Under Which of the Following Conditions Is Wealth Distributed from Debtors