Inflation can reduce the real return that lenders receive on their loans,in effect transferring wealth from borrowers to lenders.

Question

Quizplus · Accepted Answer

Inflation can reduce the purchasing power of the money that lenders receive, but it does not necessarily transfer wealth from borrowers to lenders. In fact, inflation can actually benefit borrowers if they are able to repay their loans with cheaper money in the future. The relationship between inflation and wealth transfer is more complex and depends on various factors.

Inflation Can Reduce the Real Return That Lenders Receive on Their