After graduating from high school, Shawn took out a loan to help pay for college. Now, four years later, Shawn has graduated from college. Why might Shawn benefit from rapid inflation in the economy a. Purchasing a home will be easier b. There will be more goods to purchase c. Businesses are more likely to hire during times of inflation d. Student loan repayments will not cost as much in real dollars
Business · Middle School · Mon Jan 18 2021
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Shawn might benefit from rapid inflation in the economy because:
d. Student loan repayments will not cost as much in real dollars.
During periods of rapid inflation, the value of money decreases over time. Therefore, as prices increase the value of a fixed debt, such as a student loan decreases in real terms. This situation means that Shawn would effectively be paying back the loan with dollars that have less purchasing power than when he initially borrowed them, potentially reducing the burden of the loan repayment in real terms.