If you anticipate that the inflation rate is going to rise from 2 percent to 5 percent next year, you should

Question

Quizplus · Accepted Answer

Borrowing funds at a fixed rate of interest would be the best choice in this scenario because the value of money is expected to decrease due to inflation. By borrowing money now and paying it back later with inflated currency, you would effectively be paying a lower real interest rate. Saving funds at a fixed rate of interest, keeping them in your sock drawer, or delaying a purchase would all result in a loss of purchasing power due to inflation.

If You Anticipate That the Inflation Rate Is Going to Rise