Advertisements
Advertisements
Question
State the effect of inflation on creditors.
Answer in Brief
Advertisements
Solution
- Inflation has a negative effect on creditors. When inflation develops, the money creditors receive back from borrowers has less purchasing power than when it was first lent.
- This means that the actual worth of money declines over time, and creditors essentially lose a portion of the value of their loans as a result of rising prices, because the money repaid to them buys less goods and services than it would have before inflation.
shaalaa.com
Effects of Inflation
Is there an error in this question or solution?
APPEARS IN
RELATED QUESTIONS
Answer the following :
What are the Non - economic effects of inflation?
Explain how taxes can bring about equality in income distribution.
Identity the correct statement from the following:
Purchasing power of money falls when ______.
Which of the following section of the society is most adversely affected by inflation?
Mention the effect of inflation on the value of money.
Why do producers gain in the short run during inflation?
How does inflation affect the distribution of income?
Discuss the effects of inflation on production.
How does inflation affect the following?
Debtors and creditors
