Answer to Question #54573 in Macroeconomics for jared

Question #54573
Suppose that expected inflation to equal 6 per cent in 2015, but in fact price rise by only 3 per cent. How would this unexpectedly low inflation rate help or hurt the following? a) The federal government b) A homeowner with a fixed-rate mortgage c) A worker with a 5-years fixed term wage contract d) A causal worker who has no labour contract e) A private school that has invested some of its endowment in Government Bonds.
Expert's answer
Suppose that expected inflation to equal 6 per cent in 2015, but in fact price rise by only 3 per cent. This unexpectedly low inflation rate will influence the following in such way:
a) The federal government will be helped
b) A homeowner with a fixed-rate mortgage will be hurted.
c) A worker with a 5-years fixed term wage contract will be helped.
d) A causal worker who has no labour contract will be hurted.
e) A private school that has invested some of its endowment in Government Bonds will be helped.

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