If inflation is much higher than originally anticipated,_____ are better off and _____ are worse off.
A)lenders who extended loans at fixed interest rates;people who borrowed at fixed interest rates
B)people who borrowed at fixed interest rates;banks that extended loans at fixed interest rates
C)retired people living on a fixed income;people who had borrowed fixed interest rate loans
D)people who deposited their savings at fixed interest rates;banks that accepted deposits at fixed interest rates
E)oil refiners who signed labor contracts agreeing to pay their workers the cost-of-living wage;workers who receive that cost-of-living wage

Question

Quizplus · Accepted Answer

When inflation is higher than anticipated, the real value of money decreases. Borrowers who have fixed interest rate loans benefit because they repay their loans with money that is worth less than expected. Conversely, lenders, such as banks, that extended loans at fixed interest rates are worse off because they receive payments that have less purchasing power than anticipated.

If Inflation Is Much Higher Than Originally Anticipated,_____ Are Better