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

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CollectorBabu · Accepted Answer

Correct Answer: 1 only. Statement 1 &ldquo;Inflation benefits the debtors&rdquo; is correct as unexpected inflation redistributes wealth from creditors to debtors; hence, debtors gain from inflation. Statement 2 &ldquo;Inflation benefits the bondholders&rdquo; is incorrect as the bondholder will lose since the value of interest he's supposed to get from the debtor decreases due to the effects of inflation.

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

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