Suppose that people expect inflation to be 3 percent but that, in fact, prices rise by 5
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Suppose that people expect inflation to be 3 percent but that, in fact, prices rise by 5 percent. Describe how this unexpectedly high inflation would help or hurt the following:
a. the government
b. a homeowner with a fixed-rate mortgage
c. a union worker in the second year of a labor contract
d. a college that has invested some of its endowment in government bonds
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