Unanticipated burst of inflation

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Suppose that in 2014 there is a sudden, unanticipated burst of inflation. Consider the situations faced by the following individuals. Who gains and who loses? a) A homeowner whose wages will keep pace with inflation in 2014 but whose monthly mortgage payments to a bank will remain fixed. b) An apartment landlord who has guaranteed to his tenants that their monthly rent payments during 2014 will be the same as they were in 2013. c) A banker who made an auto loan that the auto buyer will repay at a low fixed rate of interest during 2014. d) A retired individual who earns a pension with fixed monthly payments from her past employer during 2014.

Reference no: EM131098532

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