How Does Inflation Impact The Economy | The Blk Projek

  • How Does Inflation Impact The Economy

    Inflation according to Economists have an immense effect on a country’s economy. The average citizen would feel it’s effects as they live their daily lives. This is most especially true if they rely on a per diem basis.  When inflation gets out of control it would devalue a nation’s currency. Worst, it can lead into an economic recession.

    Like any other social problem such as unemployment, Inflation has its ups and downs. The average person would greatly feel it’s effect. Inflation results to so economic uncertainties.

    Here are the impacts that inflation my bring about:

    • Income redistribution: Wealth and or income is redistributed among different social status.
    • There is a fall in real income.
    • Since inflation causes people to protect their real income, there will be an increase in pay claims. Thus a risk of wage inflation may occur.
    • This isn’t good for businesses since business. Businesses cannot set up their real costs and prices.
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