If the rate of inflation in a given time period turns out to be higher than lenders and borrowers anticipated, then the effect will be:
A)a redistribution of wealth from borrowers to lenders.
B)a net gain in purchasing power for lenders relative to borrowers.
C)no change in the distribution of wealth between lenders and borrowers.
D)none of these.

Question

Quizplus · Accepted Answer

Higher than anticipated inflation benefits borrowers because they repay loans with money that is worth less than expected, leading to a redistribution of wealth from lenders to borrowers, not the other way around.

If the Rate of Inflation in a Given Time Period