Which Statement Best Describes How the Cost of Unexpected Inflation

question 14

Multiple Choice

Which statement best describes how the cost of unexpected inflation is distributed?

• A) Unexpected inflation has a greater cost for those who borrow than those who save.
• B) Unexpected inflation has a greater cost for those who hold a little money than for those who hold a lot of money.
• C) Unexpected inflation has a greater cost for those whose wages increase by as much as inflation than those who are paid a fixed nominal wage.
• D) Unexpected inflation has a greater cost for savers in high income tax brackets than for savers in low income tax brackets.

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A situation where one party is inclined to take risks because the negative consequences of the risk will be borne by another party.

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