Who among the following will be most affected by an unexpected increase in inflation?
A)Clive, a retired officer, who depends on his pension for a living
B)Pilateral Inc., a company that can raise the price of its products depending on the situation
C)Dorothy, who borrowed $9,000 from a colleague
D)Pete, a wage earner, who has an adjustment clause in his contract
E)Akira, who had taken a loan from her bank to purchase a house

Question

Quizplus · Accepted Answer

Clive, a retired officer who depends on his pension for a living, will be most affected by an unexpected increase in inflation because his fixed income will lose purchasing power as the cost of living increases.

Other individuals and entities listed may be affected to some extent, but not as significantly as someone with a fixed income like Clive. Pilateral Inc., for example, can raise the price of its products depending on the situation, so it may be able to offset some of the impact of inflation on its business. Dorothy, who borrowed $9,000 from a colleague, would have to pay back more money if inflation increases, but the impact would likely not be as severe as it would be for someone like Clive. Pete, who has an adjustment clause in his contract, may be able to negotiate higher wages to keep up with inflation. Akira, who took a loan from her bank to purchase a house, may face higher interest rates if inflation increases, but this would likely only have a marginal impact on her overall financial situation.

Who Among the Following Will Be Most Affected by an Unexpected