Imagine that you have a fixed 30-year interest rate for your
mortgage, and the economy has experienced unanticipated inflation. Examine who
the winner and loser would be. Is it the borrower or the lender in the given
scenario? Provide support for your response.
In this case the loser is the borrower and the winner is the lender.This is because the lender will have to pay amount that is worth more in terms than what was contracted for while the lender is paid an amount that is greater than anticipated. Thus wealth is redistributed from the borrower to the lender.
May 21st, 2015
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