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Questions
How does inflation affect the following?
Farmers
State the effect of inflation on the farmers.
State one favourable impact of inflation on the farmers.
Solution
- Farmers generally gain during periods of inflation, because they can obtain better prices for their crops during inflation.
- Moreover, farmers are generally debtors as they borrow funds/money for agricultural purposes. Like other debtors, they gain during inflation.
- However, small farmers do not gain much during inflation as the major portion of their produce is not marketed but instead, kept for self-consumption. Moreover, they have to purchase inputs, like seeds, fertilisers, insecticides, etc., at higher prices during inflation.
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