1. Inflation benefits the debtors. |
2. Inflation benefits the bondholders. |
A) 1 only
B) 2 only
C) Both 1 and 2
D) Neither 1 nor 2
Correct Answer: A
Solution :
Those who benefit from higher inflation are debtors and those who suffer from it are creditors. If one has substantial debt, each rupee one has to repay would be worth less than when it was borrowed. In this way, one pays back less in real terms.You need to login to perform this action.
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