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    Question

    Assertion (A): Inflation benefits creditors more than

    debtors. Reason (R): During inflation, the value of money decreases, and the real value of debt repayments also falls.
    A Both A and R are true, and R is the correct explanation of A. Correct Answer Incorrect Answer
    B Both A and R are true, but R is not the correct explanation of A. Correct Answer Incorrect Answer
    C A is false, but R is true. Correct Answer Incorrect Answer
    D A is true, but R is false. Correct Answer Incorrect Answer

    Solution

    Inflation benefits debtors because the real value of repayments decreases over time. Creditors lose purchasing power, making the assertion false but the reason true.

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