If inflation is positive and is perfectly anticipated
A)those that borrow money lose.
B)those that lend money lose.
C)those that hold paper money lose.
D)no one in the economy loses.

Question

Quizplus · Accepted Answer

Those who hold paper money lose as the value of their money decreases with inflation. However, borrowing and lending are unaffected in a perfectly anticipated inflation since the interest rate would adjust to match the inflation rate. Therefore, there are no winners or losers in the economy as a whole.

If Inflation Is Positive and Is Perfectly Anticipated