Unanticipated inflation will benefit creditors at the expense of debtors.

Question

Quizplus · Accepted Answer

Unanticipated inflation will hurt both creditors and debtors, as it reduces the value of money and makes it harder for both parties to plan for the future. Inflation does not benefit one party at the expense of the other. However, if inflation is anticipated, creditors may protect themselves by increasing the interest rate on loans, which would increase the cost of borrowing for debtors.

Unanticipated Inflation Will Benefit Creditors at the Expense of Debtors