People expect inflation to equal three percent

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Reference no: EM13685393

Presume that people expect inflation to equal three percent, but in fact, prices rise by one percent.

Explain how this unexpectedly low inflation rate would help or hurt the following:

1. Homeowner with a fixed- rate mortgage

2. A union worker in the second year of a labor contract

3. An individual who purchased inflation-indexed Treasury bonds

Reference no: EM13685393

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