3-5b Inflation Helps and Hurts

Inflation is simply a general increase in the level of prices. ‘Prices’ includes what you pay for goods and services and what you are paid in wages. So with inflation, prices and wages increase. Unanticipated inflation can benefit some groups and hurt others. For example, if you are paying a fixed level payment and inflation causes your wage to increase, you are benefitted by inflation. However, if you’re wages are fixed for a time period, inflation hurts you.

For each situation below, determine if unexpected inflation helps or hurts. There will be two correct answers per question (with square answer boxes) regarding who inflation helps or hurts.

For the other questions (round answer dots), there is only one answer.

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