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Discuss the Effects of Inflation On Producers. - Economics

Discuss the effects of inflation on Producers.

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Solution

Producers: When price increases, producers gain on account of windfall profits because prices rise at a faster rate than the cost of production. Furthermore, there is a time-lag between the price rise and an increase in the cost. Moreover, producers gain because the prices of their stock go up due to inflation. They also stand to gain as they are generally borrowers of money for business purposes.

Concept: Concept for Demand and Supply
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