Inflation is beneficial to which of the following sections of the economy?

 

Correct option is C

• Inflation occurs when there is a general increase in the price of goods and services and a fall in the purchasing value of money. Inflation allows debtors (borrowers) to pay creditors (lenders) back with money worth less than when it was originally borrowed, which benefits debtors. 

• Thus, inflation brings about a redistribution of real wealth in favour of debtors at the cost of creditors. Investors in bonds and securities with fixed interest rates, consumers, pensioners et(c) also lose in real terms during inflation.

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