INFLATION can be BENEFICIAL



Inflation is a financial indicator that measures the rate at which prices for goods and services in the economy are growing. inflation represents the change in the price of a commodity from the prior period.

INFLATION SEEMS AS A TERROR IN THE ECONOMY;

How can inflation actually help you?

Well, it can if your keep your account in the negatives.

NO, inflation CAN benefit and produce a better economy.

When the economy is not running at capacity, meaning there is unused labor or resources, inflation theoretically helps increase production. More dollars translates to more spending, which equates to more aggregated demand. More demand, in turn, triggers more production to meet that demand.
  • During periods of inflation, investors and entrepreneurs are given more incentives (like tax concessions and subsidies) by the government to invest in productive activities. As a result, they obtain higher returns.
  • The value of debt will be decreased at the time of inflation because of the decline in the value of money. So, debtors can repay their loans easily.

  • The demand for different production elements, including labor grows. As a result, employment and income rise in response to inflation.

  • Financial institutions get more money because of an increase in wages and sufficient deposits. It makes it easy for people to borrow money from banks.




Comments

  1. True It depends upon the resources utilisation. If fully utilised and than inflation occurs it is not good for the economy. But if resources are not fully utilised than it is good for the economy.

    ReplyDelete
  2. great article enlightened me , now i am an economist

    ReplyDelete

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