(Answered) Suppose that people expect inflation to equal 1 percent but

Economics

Suppose that people expect inflation to equal 1 percent, but in fact, prices rise by 3 percent. Describe how this unexpectedly low inflation rate would help or hurt the following:

a. A homeowner with a fixed- rate mortgage.

b. A union worker in the second year of a five-year labor contract.

c. A student with a variable loan tied to inflation.

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Macroeconomics, Economics

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