Of the Following, Who Would Most Likely Be Hurt by an Unanticipated

question 25

Multiple Choice

Of the following, who would most likely be hurt by an unanticipated increase in the rate of inflation?

• A) an individual with a 30-year fixed-rate home mortgage loan
• B) the U.S. federal government because it has a large quantity of outstanding debt
• C) lenders who have made long-term loans at fixed interest rates
• D) Social Security recipients whose benefits are adjusted upward as the general level of prices increases

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Definitions:

Consumer Surplus

The dissimilarity in what consumers intend to pay for a good or service versus what they actually spend.

Producer Surplus

The disparity between the minimum amount sellers are ready to take for a product or service and the actual price they get in the market.

Price Received

The amount of money paid to a seller or producer for a good or service, excluding any taxes, fees, or additional charges.

Deadweight Losses

A loss of economic efficiency that can occur when the equilibrium for a good or service is not achieved or is not achievable.