In times when prices rise unexpectedly:
A) producers are made better off at the expense of consumers.
B) consumers are made better off at the expense of producers.
C) lenders are made better off at the expense of borrowers.
D) borrowers are made better off at the expense of lenders.

Question

Quizplus · Accepted Answer

When prices rise unexpectedly, inflation occurs, which erodes the real value of money. Borrowers benefit because they repay their loans with money that is worth less than when they borrowed it, while lenders lose because the money they receive back has less purchasing power.

In Times When Prices Rise Unexpectedly