ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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people who have a steady job
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people who have borrowed money
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people who have loaned money to others
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people who have investments in the stock market
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Detailed explanation-1: -Lenders are hurt by unanticipated inflation because the money they get paid back has less purchasing power than the money they loaned out. Borrowers benefit from unanticipated inflation because the money they pay back is worth less than the money they borrowed.
Detailed explanation-2: -In 8 out of 17 countries, lower-income groups whose consumption basket is mainly composed of essential goods are most affected by the increase in prices. Poorest households suffered a rise in prices 2 to 5 percentage points higher than the wealthiest households.
Detailed explanation-3: -Unanticipated inflation occurs when the general price level changes unexpectedly. Those who are retired or on a fixed income seem to take the hardest hit, as well as those institutions that offer loans.
Detailed explanation-4: -Inflation tends to harm savers and lenders the most. Savers see their cash deposits eroded of purchasing power, while those who loaned money at lower fixed interest rates are stuck with less valuable loans until they mature. Consumers are also harmed by inflation as goods become more expensive.