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79
T/F: Unanticipated inflation can benefit lenders and harm borrowers.
Why?
Why?
False - Unanticipated deflation harms borrowers and benefits lenders.
This is because borrowers did not predict the deflation, so suddenly they have to pay back more money than they originally thought they would have to (b/c the interest and principle on the loan is now worth more).
This is because borrowers did not predict the deflation, so suddenly they have to pay back more money than they originally thought they would have to (b/c the interest and principle on the loan is now worth more).
Flashcard info:
Author: savhighsmith
Main topic: Economics
Topic: History of Economics
School / Univ.: UGA
City: Athens
Published: 12.10.2010