________ Would Be Hurt by Unexpected Inflation

question 40

Multiple Choice

________ would be hurt by unexpected inflation.

• A) Someone who lent money out at a fixed interest rate
• B) A firm that hired a worker on a two-year wage contract
• C) Someone who borrowed money at a fixed interest rate
• D) A worker whose wage increases with inflation
• E) A firm that purchased inputs with a two-year contract

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Definitions:

Indebtedness To Foreigners

The total amount of money that a country owes to foreign creditors.

Current Consumption

The purchases of goods and services for immediate use, as opposed to saving or investing for future use.

Budget Deficits

The financial situation that occurs when an entity's expenditures exceed its revenues over a specified period of time.

Foreign Exchange Reserves

Assets held on reserve by a central bank in foreign currencies, which are used to back liabilities and influence monetary policy.