ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Lenders are hurt by unanticipated inflation because the money they get paid back has less purchasing power than the money they loaned out. Borrowers benefit from unanticipated inflation because the money they pay back is worth less than the money they borrowed.

Detailed explanation-2: -The main redistribution impact of inflation occurs through its effect on the real value of economic participant’s wealth. In general, unanticipated inflation redistributes wealth from creditors to debtors, helping borrowers and hurting lenders. An unanticipated decline in inflation has the opposite effect.

Detailed explanation-3: -Redistribution of income occurs because some wages and salaries increase more rapidly than the price level while other wages and salaries increase more slowly than the price level.

Detailed explanation-4: -Debtors and Creditors: During periods of rising prices, creditors gain and debtors lose. 2. Equity Holders or Investors: Persons who hold shares or stocks of companies gain during inflation. 3.

Detailed explanation-5: -Inflation has the following effects on the distribution of wealth: Usually, during inflation, most people experience a rise in their income levels. Some people might gain at the cost of others. As the sellers will be able to sell the goods at a higher rate to its customers due to inflation.