The unanticipated inflation of the last several decades benefited largely
A)elderly people whose major source of income comes from private pension plans
B)lending institutions, especially savings and loans
C)homeowners with fixed mortgage rates
D)taxpayers
E)all of the above

Question

Quizplus · Accepted Answer

Homeowners with fixed mortgage rates benefited from unanticipated inflation because the value of their mortgage debt decreased as the general price level increased. On the other hand, lenders and savings and loans suffered losses due to inflation as the real value of their loans decreased. Elderly people relying on fixed private pension plans also lost purchasing power due to inflation, and taxpayers experienced higher prices for goods and services without a corresponding increase in their incomes. Therefore, options A, B, D and E are incorrect.

The Unanticipated Inflation of the Last Several Decades Benefited Largely