During a period of inflation:
A) All prices will rise.
B) People who have borrowed money may be better off.
C) The real incomes of everyone will decrease.
D) All prices will fall.

Question

Quizplus · Accepted Answer

During a period of inflation, borrowers may benefit because they repay their loans with money that is worth less than when they originally borrowed it. This does not necessarily mean all prices rise uniformly (A), nor does it imply that everyone's real income decreases (C), as the impact of inflation can vary across different sectors and individuals. Option D is incorrect because inflation is characterized by rising, not falling, prices.

During a Period of Inflation