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One problem with inflation is redistribution. Inflation makes some people better off while it makes others worse off. The three things that cause redistribution are price effects, wealth effects, and income effects.
Wiki User
∙ 9y ago
Wiki User
∙ 14y agoinflation is a persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services.
it is a problem: an increase in the general level of prices implies a decrease in the purchasing power of the currency. That is, when the general level of prices rises, each monetary unit buys fewer goods and services.
Wiki User
∙ 12y agoBecause price level increase the nominal varible also increasing but for the real variable is decrease
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What is inflation and what can the government do about it?
Inflation is both good and bad for a couple of reasons. Inflation means the economy is growing strong and prices are going up. Too much inflation has a bad effect on people who are struggling to have their paychecks meet the growing prices
Will incorrect tire inflation cause bad gas mileage?
bad gas mileage
Is inflation always bad for economy?
Inflation is certainly not always bad for economy, in fact a moderate level of inflation matching to it's growth rate is good for the country. Moderate inflation suggest demand in the system while no inflation or deflation suggest demand collapse which is much more dangerous than Inflation. For Instance US inflation is 1.5 to 2% while it's growth is 2-3%. This equation is ok. A Country having an inflation equal to it's growth rate is not bad though it is always preffered to have lower inflation and high growth rate. But it is difficult to achieve on a continuous basis. Reserve banks all over the world prefer and try hard to have moderate inflation and would worry if there is a situation of deflation. But too high inflation will make the currency of the country very weak against the major global currencies and will bring the economy to it's knees, like what happened in case of Zimbabwe.
Why is it that when there is low inflation workers will accept a low wage increase?
From the worker's perspective, raises are judged good or bad in reference to inflation. Its really a question of buying power more than the actual amount of money. Think of this example... If inflation is running 2% per year and you get a 2% raise, you break even. Your salary buys the same stuff at the start the year and the end of the year. If inflation is 2% and you got a 4% raise, you're now making more money than before. You have more buying power relative to the economy as a whole. So as a worker, your goal is to be able to buy more each time you get a raise. So if inflation is low, you can accept a lower raise and still increase buying power as long as the raise is higher than inflation. So when infaltion is low, a low raise (that's still bigger than the rate of inflation) just as effective as a large raise when inflation is high.
Is inflation good or bad?
Inflation has always had an indisputable benefit for the governments playing this game, since few people understand what is happening until the policy has run amuck. Unfortunately, many of the most influential people in our society support a little inflation as a good thing. They argue that it keeps the nation out of depressions and sometimes provides a Robin Hood effectInflation has always had an indisputable benefit for the governments playing this game, since few people understand what is happening until the policy has run amuck. Unfortunately, many of the most influential people in our society support a little inflation as a good thing. They argue that it keeps the nation out of depressions and sometimes provides a Robin Hood effect
What is inflation and what can the government do about it?
Inflation is both good and bad for a couple of reasons. Inflation means the economy is growing strong and prices are going up. Too much inflation has a bad effect on people who are struggling to have their paychecks meet the growing prices
Why is inflation bad?
Chudir naati :D
Will incorrect tire inflation cause bad gas mileage?
bad gas mileage
Could you Describe the spilt of Germany?
Describe how bad inflation in Germany was
Is near zero level inflation is bad?
Though a Zero inflation is practically very difficult to achieve, very low levels of inflation are actually bad for the economy. Inflation determines the increase in prices of goods and services in a country's economy year on year. A very low or zero inflation means a very low level of growth in prices for goods and services which in turn implies that the economic growth in the country is also very poor. In a growing or flourishing economy the prices of goods and services increase in a steady and consistent manner year on year. This means the country's economy is growing steadily. Inflation rates of around 5-6% are considered ideal for countries. A very low inflation is bad for the economy and at the same time a double digit inflation is also very bad for the economy.
Why was it so difficult to find an effective solution to inflation problems between 1964 and 1983?
It is due to the nature of economic policy. Normally inflation and unemployment are inversely related, so policy decisions can be made to cure one at the expense of the other (for instance, raising of interest rates lowers inflation but risks stifling business growth). During the period between 1964 and 1983, we experienced "stagflation" (high unemployment AND high inflation). So when we experience both at the same time, policy makers have their hands tied as to what to do. If they decide to try to get inflation lower, they risk making unemployment worse (and it's already bad) and if they try to get employment lower, they risk making inflation worse.
Is inflation always bad for economy?
Inflation is certainly not always bad for economy, in fact a moderate level of inflation matching to it's growth rate is good for the country. Moderate inflation suggest demand in the system while no inflation or deflation suggest demand collapse which is much more dangerous than Inflation. For Instance US inflation is 1.5 to 2% while it's growth is 2-3%. This equation is ok. A Country having an inflation equal to it's growth rate is not bad though it is always preffered to have lower inflation and high growth rate. But it is difficult to achieve on a continuous basis. Reserve banks all over the world prefer and try hard to have moderate inflation and would worry if there is a situation of deflation. But too high inflation will make the currency of the country very weak against the major global currencies and will bring the economy to it's knees, like what happened in case of Zimbabwe.
What does inflation mean to a pensioner?
It means bad news. A pensioner gets an income which is fixed, but the money buys less when inflated, so it translates as less spending power.
Why is your tire getting bald on the inside and outside?
It depends: If tire is on the front of car it can be caused by bad wheel alignment or under-inflation of the tire...on the rear by under-inflation.
How do chemicals affect the inflation of a balloon?
Inflation of a balloon is NOT a chemical reaction, so there are no chemicals involved in 'affecting' it.
In Germany what did inflation do?
inflation is when the value of paper money or notes falls so when inflation started in Germany, no one could afford any important supplies such as food.
What were the economic conditions during World War 1 in Russia?
They Were BAD! There was massive inflation because of all of the debt the war was putting on them. They also were losing millions of men on the battle field so many women had to do the work back home so the economy fell rapidly. They Were BAD! There was massive inflation because of all of the debt the war was putting on them. They also were losing millions of men on the battle field so many women had to do the work back home so the economy fell rapidly.
