Suppose there's an unanticipated increase in the rate of inflation. Which of the following is likely to be true?
a. Workers whose nominal wages are set at the beginning of the year are likely to suffer a decrease in real wages.
b. Creditors who made loans based on the anticipated rate of inflation will earn a higher real interest rate than they expected.
c. The real value of outstanding loan balances of debtors will increase.
d. Workers whose nominal wages are set at the beginning of the year are likely to enjoy an increase in real wages.
a. Workers whose nominal wages are set at the beginning of the year are likely to suffer a decrease in real wages.
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