Final answer:
Borrowers with loans at fixed interest rates benefit the most from high unanticipated inflation, as they pay back their debts with less valuable money. In contrast, individuals on a fixed income and banks with fixed-rate loans suffer as their income and repayments lose value, eroding purchasing power and profitability.
Step-by-step explanation:
Who Benefits Most from High Unanticipated Inflation?
When considering who would benefit the most from a period of high unanticipated inflation, it is essential to understand the impact of inflation on different economic actors. Inflation can help those who owe money, such as borrowers, because they can pay off their debts with money that is less valuable than when they initially borrowed. This means that a borrower paying a fixed interest rate benefits from high inflation as the real interest rate they pay becomes lower.
Conversely, a retired couple living on a fixed income would not benefit from inflation. Their income does not increase to compensate for the rise in prices, which erodes their purchasing power. Similarly, a bank that has given out loans at low fixed interest rates would suffer from inflation as the money they get repaid loses value over time, adversely affecting the bank's profitability.
In summary, the retired couple on a fixed income and the bank issuing fixed interest rate loans would be negatively impacted by high unanticipated inflation. It is the borrowers with loans at fixed interest rates who stand to gain from such economic fluctuations.