GCEEconomicsInflation and Unemployment2024

Which of the following groups is MOST likely to benefit during a period of unanticipated inflation?

APensioners receiving fixed monthly payments
BCommercial banks holding long-term fixed-rate loans
CDebtors who borrowed money at fixed interest ratesCORRECT
DSalary earners whose wages are not indexed to inflation
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Why the answer is C, and why the others tempt you.
Debtors benefit from unanticipated inflation because they repay loans with money that has less purchasing power than when they borrowed it, effectively reducing the real burden of their debt. Pensioners, fixed-wage earners, and creditors (including banks holding fixed-rate loans) all lose purchasing power during inflation.
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