Unanticipated high inflation always means:
A) a loss in purchasing power for lenders.
B) a decrease in the amount of real taxes paid by citizens and firms.
C) a redistribution of wealth from the rich to the poor.
D) a loss in purchasing power for both lenders and borrowers.

Question

Quizplus · Accepted Answer

Unanticipated high inflation erodes the real value of money, meaning that lenders receive less purchasing power back than they lent out, resulting in a loss for them. Borrowers, however, benefit as they repay loans with money that is worth less than when they borrowed it.

Unanticipated High Inflation Always Means