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प्रश्न
Explain the effect of inflation on the fixed income groups and borrowers.
थोडक्यात उत्तर
उत्तर
- Effect on fixed income group: Fixed salaries are paid to workers, clerks, instructors, and other employees. They're the losers. During inflation, money income does not rise in proportion to prices. Thus, inflation reduces the purchasing power of money.
- Effect on borrowers and debtors: Inflation benefits debtors. For example, if a debtor repays ₹2,000 to creditors during an inflationary period, they will receive less purchasing power than they borrowed. Before inflation, borrowing ₹ 2,000 may be enough to buy 40 quintals of wheat. However, due to inflation, the price of wheat increased by double, and the aforementioned amounts were sufficient to purchase the first 20 quintals. Debtors profit, while creditors lose.
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