Question

Whom does inflation hurt the most?

Question 1 options:

consumers


debtors


producers


creditors

Answer 1

The correct answer is D) Creditors

Step-by-step explanation:

Inflation is the rise in the prices of goods and services. It is actually the depreciation in the value of money. Suppose if at one point of inflation, a product is purchased at $5, then if the inflation rises then the same product will now be purchased in say $6. This is how inflation affects the value of money.

The creditors who gave loans to others will be most affected by the increase in inflation, because they will receive the same amount of money back but with the decreased value of the money. Suppose, they gave $5000 loan to someone, and with the increase in inflation the value of money will decrease but they will still get the credited amount, which will be a loss for them.

Answer 2

consumers

Step-by-step explanation:

The consumers of any given market are the ones that finally pay the increase of prices driven by inflation.

Inflation means that there is an increase in the prices of goods and services per year. This increase affects all the actors in a given economy but in the bottom-line consumers are the ones that pay these increment in prices.