Question
If you borrow money at what you believe is an appropriate interest rate for the level of expected inflation, but the actual inflation rate turns
If you borrow money at what you believe is an appropriate interest rate for the level of expected inflation, but the actual inflation rate turns out to be much higher than you had expected
you will be paying the loan back with dollars that have much less purchasing power than you had expected
you will be paying the loan back with dollars that have much higher purchasing power than you had expected.
you will be paying the loan back with dollars that have the same purchasing power as the dollars you borrowed.
you, the borrower, will gain from an intended redistribution of wealth
you, the borrower will unintentionally redistribute wealth to the lender
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