Question

Who amongst the following benefits most from inflation?

  1. Creditors
  2. Debtors
  3. Saving Bank Account Holders
  4. Government Pensioners

Answer:

Option B: Debtors

Detailed Solution:

The correct answer is “Debtors”.

Debtors benefit from inflation because the money they repay becomes less valuable over time. In other words, they pay back the loan with money that is worth less than when they borrowed it.