In the Case of an Unanticipated Inflation

question 112

Multiple Choice

In the case of an unanticipated inflation:

• A) creditors with an unindexed contract are hurt because they get less than they expected in real terms.
• B) creditors with an indexed contract gain because they get more than they contracted for in nominal terms.
• C) debtors with an unindexed contract do not gain because they pay exactly what they contracted for in nominal terms.
• D) debtors with an indexed contract are hurt because they pay more than they contracted for in nominal terms.