Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
A→B→C→D
B
A→C→B→D
C
C→B→A→D
D
B→C→A→D
Understanding the Answer
Let's break down why this is correct
Answer
Unanticipated inflation affects different groups in various ways. First, when inflation occurs unexpectedly, borrowers benefit because the real value of the money they owe decreases, making it easier for them to repay their debts. Meanwhile, lenders are hurt because the money they receive back has less purchasing power than when they lent it, reducing the value of their returns. Savers are also negatively impacted because their savings lose value over time due to rising prices, making it harder to buy what they need. Finally, as these changes happen, the overall economy must adjust to the new price levels, affecting all economic agents and leading to shifts in spending and investment behavior.
Detailed Explanation
When inflation happens unexpectedly, borrowers benefit first. Other options are incorrect because This order suggests that lenders are affected before savers; This sequence starts with savers, but it misses how borrowers benefit first.
Key Concepts
Unanticipated Inflation Effects
Economic Agents
Macroeconomic Policy Responses
Topic
Unanticipated Inflation Effects
Difficulty
medium level question
Cognitive Level
understand
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