Consider the following statements : 1. Inflation benefits the debtors. 2. Inflation benefits the bondholders. Which of the statements given above is/are correct?

QUESTION

Medium

Economy

Prelims 2013

Consider the following statements :

Which of the statements given above is/are correct?

Select an option to attempt

Explanation

Inflation redistributes wealth from creditors to debtors i.e., lenders suffer and borrowers benefit out of inflation.

Bondholders - This person has lent money (to the debtor) and received a bond in return. So, he is the lender, he suffers.

Therefore, Answer choice is (A) 1 only (Debtor benefits from inflation).

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