Now you face a wonderful decision. Imagine that you just won a lottery jackpot of $100,000....
Now you face a wonderful decision. Imagine that you just won a lottery jackpot of $100,000. If you expect inflation to accelerate, should you buy that home you’ve been thinking of now? What would you decide if the rate of inflation is negative?
Homework Answers
If the inflation rate is expected to accelerate, then it is better to buy the home now as the real value of $100000 will fall quickly. With inflation, the price of the home may go up.
Inflation being negative means inflation is zero. In this situation, the value of money will remain the same. So the home can also be bought later as the value of money will be same.
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