Consider the following statements:
1. Inflation redistributes income and wealth in favour of rich
2. Inflation reduces the purchasing power of a rupee and cost of living
Which among the above is / are correct statements?

Answer: [C] Both 1 & 2

Inflation redistributes the wealth and income in such a manner as to injure the interests of consumers, creditors, salary and wage earners. It favors rich, merchants and even farmers sometimes. Thus first statement is correct. Second statement is also correct.

This question is a part of GKToday's Integrated IAS General Studies Module