In 2012, John takes out a 30-year bank mortgage loan at a fixed interest rate.He buys a house with the loan. In 2014–2018, there is a large amount of inflation.

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Presentation transcript:

In 2012, John takes out a 30-year bank mortgage loan at a fixed interest rate.He buys a house with the loan. In 2014–2018, there is a large amount of inflation. Who is hurt and who is helped by this inflation, ceteris paribus? A.John is helped and the bank is hurt. B.The bank is helped and John is hurt. C.John and the bank are both hurt. D.John and the bank are both helped.

In 2012, John takes out a 30-year bank mortgage loan at a fixed interest rate. He buys a house with the loan. In 2014–2018, there is a large amount of inflation. Who is hurt and who is helped by this inflation, ceteris paribus? A.John is helped and the bank is hurt. B.The bank is helped and John is hurt. C.John and the bank are both hurt. D.John and the bank are both helped.

In 2012, John takes out a 30-year bank mortgage loan at a fixed interest rate. He buys a house with the loan. In 2014–2018, there is a large amount of inflation. Who is hurt and who is helped by this inflation, ceteris paribus? A.John is helped and the bank is hurt. B.The bank is helped and John is hurt. C.John and the bank are both hurt. D.John and the bank are both helped. The money the bank receives in the future, after inflation, is worth less than when they loaned it out.