How does deflation affect borrowers and lenders?

Borrowers who purchase assets will lose because, during deflation, assets lose their worth. During deflation, the lenders will not lend money as the interest rates will be low. You can read about the Inflation in Economy- Types of Inflation, Inflation Remedies [UPSC Notes] in the given link.

Further readings:

  1. RBI – Know About Reserve Bank of India, Functions, Composition
  2. Monetary Policy Committee (MPC) – An Overview, Instruments of Monetary Policy

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