Question

Mr. divers retired last year with a small pension. he also has a mutual fund account made entirely up of stable fixed-rate bonds. between the two, he is able to live quite comfortably. how will unanticipated inflation affect mr. divers' retirement account?

Answer 1

Mr. Divers will be affected bey th unatnticpated inflation causng his retirement account to be worth less in the future than before inflation. Due to inflation, the prices of goods and services rise causing his money to be spent in a shorter time period on less items then it would have if it were spent without any type of inflation issues.