Consider the following statements :
1. Inflation benefits the debtors.
2. Inflation benefits the bond-holders.
Which of the statements given above is/are correct?
Consider the following statements :
1. Inflation benefits the debtors.
2. Inflation benefits the bond-holders.
Which of the statements given above is/are correct?
For debtors, “real” interest rate goes down with inflation. Thus it benefits them On the other hand, with inflation the yield of bonds goes down, thus a negative effect for bond-holders