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Who Gains If Inflation Turns Out to Be Higher Than

question 153

Essay

Who gains if inflation turns out to be higher than expected: the lender or borrower? What happens if inflation turns out to be lower than expected?


Definitions:

Capital Lease

A lease agreement considered similar to a purchase of the leased asset, showing both an asset and a liability on the lessee's balance sheet.

Contingent Rentals

Rental payments that are not fixed or determined upfront but depend on the occurrence of a future event or condition.

Accumulated Amortization

The total amount of amortization expense that has been applied to a fixed asset since its purchase.

Future Minimum Lease Payments

The total amount of payments that the lessee is expected to make under the lease agreement over its term.

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