Which of the Following Groups Would Benefit Most in Real

question 99

Multiple Choice

Which of the following groups would benefit most in real terms from a period of high and unanticipated inflation,as was experienced in Canada in the early 1970s?

• A)mortgage companies and banks who issued fixed-rate mortgages to clients
• B)banks with outstanding loans to their customers
• C)seniors whose income is largely interest earnings on past savings
• D)firms that maintain large cash balances for the operation of their business
• E)homeowners who had long-term fixed-rate mortgages

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Definitions:

Higher Returns

Higher Returns denote the increased earnings or gains achieved from an investment, surpassing the original amount invested.

Higher Risk

Higher risk denotes investments or actions that have a greater chance of loss or volatility, often associated with potentially higher returns.

Tax Rates

Percentages at which income, property, or sales are taxed by the government.

Required Rate

The minimum return that investors demand for investing in a specific asset or undertaking a project.