If inflation turns out to be higher than was anticipated,

Question

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Inflation reduces the purchasing power of money, which means that the value of debt decreases over time. This benefits debtors as they will repay their loans with less valuable money. For example, if a person took out a loan of $100 and the inflation rate turns out to be 5%, then at the end of the year, the value of that $100 would be $95 in terms of purchasing power. As a result, the debtor would be repaying the loan with less-valuable money.

If Inflation Turns Out to Be Higher Than Was Anticipated