Under which condition 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, debtors have to pay back their loans with money that is worth more than they anticipated. This effectively transfers wealth from the debtors, who are paying back the loans, to the creditors, who are receiving the payments.

Under Which Condition Is Wealth Distributed from Debtors to Creditors