Why Are Creditors Harmed by Unexpected Inflation

question 8

Multiple Choice

Why are creditors harmed by unexpected inflation?

• A)​Creditors receive lower nominal rates of interest when prices rise.
• B)​Creditors are paid back with more valuable dollars.
• C)​Creditors receive higher nominal rates of interest when prices rise.
• D)​Creditors are paid back money with less spending power than they expected when the money was loaned out.

---

Definitions:

Calories

Units of energy used to measure the energy content in food and beverages.

Obesity

A medical condition characterized by excessive body fat that presents health risks, including cardiovascular diseases, diabetes, and hypertension.

Psychological Problems

Issues affecting mental health and well-being, including emotional, behavioral, and cognitive conditions or disorders.

Pulmonary Problems

Health issues related to the lungs, affecting breathing and oxygenation of blood.