Business, 18.03.2020 02:24 angelolucero146

Suppose that anticipated inflation is 4% for the coming year, with loan contracts set at 7% with the expectation of a 3% return after inflation. If the actual inflation rate at the end of the year is 2%:

debtors gain at the expense of creditors.
people on a fixed income see the purchasing power of their incomes rising.
creditors gain at the expense of debtors.
there is a redistribution of income from creditors to debtors.

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Suppose that anticipated inflation is 4% for the coming year, with loan contracts set at 7% with the...

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