Answered

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If inflation is widely expected to be 8% but ends up being 5%, then

A. Debtors are better off and creditors are worse off.
B. Debtors are worse off and creditors are better off.
C. All individuals are worse off because of the level of uncertainty.
D. All individuals are better off because of the level of uncertainty.

Sagot :

GinnyAnsweridn

Final answer:

Inflation deviations impact borrowers and lenders differently, with debtors faring better when inflation is higher than expected.


Explanation:

When inflation deviates from expectations, it leads to a redistribution from borrowers to lenders or vice versa. If inflation is lower than expected, debtors are worse off, and creditors are better off. Conversely, if inflation is higher than anticipated, debtors benefit while creditors suffer.


Learn more about Inflation impact on debtors and creditors here:

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