Correct Answer: Borrowers
Subject: economics
Explanation: • <b>Key Fact</b> Borrowers benefit from inflation because they repay loans with money that is worth less. • <b>Supporting Detail</b> Lenders lose out because they get back less valuable money than they lent. • <b>Related Concept</b> This is called the "Inflation Premium" where real interest rate < nominal interest rate. • <b>Why wrong options are wrong</b> Wage earners lose if salaries don't increase as quickly as inflation. • <b>Exam Trick</b> Borrower = Happy during inflation. Lender = Sad. • <b>Additional Info</b> Some farmers and commodity producers also earn more when food prices rise faster than costs.
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