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UPSC Economics Indian Economy / भारतीय अर्थव्यवस्था Question Bank Industries and Infrastructure

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

    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.                             


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