Which of the following is most likely to benefit from inflation?

A person who has taken out a fixed-rate loan is most likely to benefit from inflation because the real value of the money they owe decreases as inflation rises. When inflation occurs, the cost of goods and services increases, which means that over time, the amount of money needed to repay the loan will be worth less in terms of purchasing power.

For example, if someone has a fixed-rate loan of $100,000 with a set interest rate, as inflation erodes the value of money, the actual cost of repaying that loan—when adjusted for inflation—decreases. Therefore, the borrower can repay the loan using less valuable dollars in the future compared to when they initially borrowed the money. This makes fixed-rate loans advantageous in inflationary periods, as they effectively allow the borrower to pay back less in real terms than they originally borrowed.

Other options, while relevant in financial situations, do not illustrate the benefit from inflation as clearly. For instance, saving money in a bank may not keep pace with inflation, and variable-rate debt could actually increase in cost during inflation. Furthermore, investing solely in cash would generally lead to a loss of purchasing power over time due to inflation.