Economic Awareness - Sectors of Indian Economy
Which of the following groups is most likely to benefit from unexpected inflation?
Which of the following groups is most likely to benefit from unexpected inflation?
medium Q6 of 15
Step-by-Step Solution
Step 1: Understand unexpected inflation
Unexpected inflation reduces the real value of money unexpectedly, affecting borrowers and lenders differently.Step 2: Identify who benefits
Debtors with fixed interest loans repay their loans using money with lower purchasing power, effectively reducing their real repayment burden.Step 3: Eliminate other options
Fixed-income pensioners, creditors, and savers lose because their real income or returns decline.Final Answer:
Debtors with fixed interest loans → Option BQuick Check:
Unexpected inflation benefits debtors with fixed repayments ✅
Quick Trick: Unexpected inflation helps debtors repay loans with cheaper money.
Common Mistakes:
- Assuming creditors or savers benefit during inflation.
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