1. Redistributes wealth from those who lend money in fixed nominal amounts to those who borrow it.
2. Redistributes wealth from those who borrow money in fixed the nominal amounts to those who lend it.
3. Redistributes wealth from debtors to creditors.
4. Does both 2 and 3 above.
Choose the correct option.
Option 4 is the correct one. When deflation occurs, people who borrow money---that is, debtors---are forced to pay back dollars that are worth more than the dollars they borrowed. Wealth is thus redistributed from them to their creditors.
Unexpected inflation has the opposite effect---it redistributes wealth from creditors (people who lend money) to debtors (people who borrow it). Borrowers then get to pay back with dollars that are worth less.