ALL Inflation (Winners & Losers) FRQ's
2019 AP Macroeconomics Exam (Set 1)
Answer - C
Unanticipated Inflation means that the Price Level has Increased
Creditors who loan money when prices are low and then receive payments when prices are high
are being paid back money that has a lower purchasing power
in essence, the money they lent out could buy more went lent
and can buy less when paid back
Lenders lose, borrowers benefit
Answer - B
Borrowers benefit as when they borrowed the money its purchasing power was high
after inflation
its purchasing power is low
Creditors are worse off as they are paid back dollars that can buy back less
than when they lent the money to the Borrower
Answer - D
Borrowers benefit as when they borrowed the money its purchasing power was high
after inflation
its purchasing power is low
Creditors are worse off as they are paid back dollars that can buy back less
than when they lent the money to the Borrower
Answer - D
Unanticipated inflation benefits borrowers as when prices rise
the money paid back to lenders has less purchasing power
meaning that it can buy less actual stuff than when it was initially loaned.
