Generally speaking,which of the following groups would tend to gain real income from the wealth effects of inflation?
A)People with fixed income.
B)People who have passbook savings accounts at fixed rates of interest.
C)People who own assets that are appreciating faster than the inflation rate.
D)People who hold all of their assets in the form of cash.

Question

Quizplus · Accepted Answer

People who own assets that are appreciating faster than the inflation rate would tend to gain real income from the wealth effects of inflation. As the value of their assets increase faster than the rate of inflation, they can sell those assets for a higher price and benefit from the increased value. People with fixed income, people who have passbook savings accounts at fixed rates of interest, and people who hold all of their assets in the form of cash would not benefit from inflation as their income or savings would lose purchasing power with the rise in prices.

Generally Speaking,which of the Following Groups Would Tend to Gain