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Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unexpected inflation occurs in the economy, then
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Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unexpected inflation occurs in the economy, then

User Cap
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Answer:

The borrower will be benefited and the lender will be in harm.

Step-by-step explanation:

Then the borrower will be benefited and the lender will be in harm because the inflation in the economy reduces the purchasing power or it depreciates the value of the currency. Therefore, if there is unexpected inflation then the borrower will get the benefit, here the value of paid money is less as compared to the value of money when is borrowed. Similarly, the lender will be in loss because the current value of money has decreased.

User Ty Morton
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