Question

If the Fed were to unexpectedly increase the money supply, creditors would gain at the expense of debtors. a. True b. False

Answer 1

Answer: False

Step-by-step explanation:

It should be noted that when the Fed unexpectedly increase the money supply, the debtors would gain at the expense of the creditors.

This is because when the Fed increase the money supply, there will more money in circulation which means that money will lose its value. In this case, the debtor gains at the expenses of the creditor because when the creditor collects the money back, it won't be as valuable as before as the value has reduced