Inflation has a bad reputation – who wants to pay higher prices? Make the case that...

Inflation has a bad reputation – who wants to pay higher prices? Make the case that inflation is “neutral” or at least is not entirely bad.

Expert Solution

Inflation in general terms is the rise of price level of goods and services in an economy over a given period of time

it decrease the purchasing power of money

it is generally considered as a negative term for an economy because it overall depreciate the money power and it is bad for the person who has taken the loan because he has to pay a higher price due to the inflation effect

but sometime inflation is also considered as good for the economy
it reduces the chance of deflation

when deflation arises in an economy then it causes decrease in the price of goods and services and it causes less demand

when demand is less ,then the company also produces very less and this causes slowing down of economy

so many company closes and ultimately not good for the economy

second benefit is that inflation is that it is good for the creditors who give the loan because they can receive higher amount of money then they actually give

Rahul Sunny answered 2 years ago

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