Question

Who if anyone benefits from inflation? Please explain your answers

Answer 1

Ans:

Inflation is the increase in the general price level of goods and services and this leads to fall in the purchasing value of the money.Inflation benefits both borrowers and lenders depending on circumstances.

The benefits of inflation is enjoyed by the borrowers as the value of the money at the time of repayment is not the same when it is borrowed.Due to inflation the purchasing value of the money fall But the borrower still owes the same amount of money to the lender.

The benefit to the lender is that due to inflation the cost of living increases and this will lead to increased spending and increased borrowing. The will allow the lender to collect interest for a longer period.