If inflation is unanticipated, then income may be redistributed from creditors to debtors.

Name: If inflation is unanticipated, then income may be redistributed from creditors to debtors.
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Question

Quizplus · Accepted Answer

If inflation is unanticipated, it can erode the real value of debts owed by borrowers, leading to a transfer of wealth from lenders/creditors to borrowers/debtors. This is because borrowers can pay off their debts with less valuable currency. As a result, debtors may gain at the expense of creditors.

If Inflation Is Unanticipated, Then Income May Be Redistributed from Creditors