How does inflation affect the economy?

Question

asked Mar 5, 2021 108k views

1 Answer

Armen Markossyan · Answer 1 · 2021-03-10T15:33:53+0000

1) Erodes Purchasing Power. This first effect of inflation is really just a different way of stating what it is.

2) Encourages Spending, Investing. A predictable response to declining purchasing power is to buy now, rather than later.

3) Causes More Inflation.

4) Raises the Cost of Borrowing.

5) Lowers the Cost of Borrowing.

Reduces Unemployment.

Step-by-step explanation: