Consider the following statements with respect to inflation:

1. Inflation is good for those who lend money, than for those who borrow money.

2. Inflation is good for those who make the products, than for those who buy it.

Which of the statements given above is/are correct?

• Inflation is good for those who borrow money, as once the inflation eases out the reduced inflation will offset the interest rate charged and, thus, in effect reduces the cost of borrowing for the borrower.

• Inflation will have the same effect on those who make the product and those who buy it. This is because for those who make the product, the factor cost will increase and for those who buy the product, the cost of the product is increased.