Question

Explain the causes and effects of Inflation.

Answer 1

inflation can come from both demand and supply side of the economy

#effects

#reduces the purchasing power

#it incentives spending and deter saving

#helps debtors and harm lenders

#helps and hurt group depends on income

#can hurt foreign investment

#hurts outbound travel and helps inbound tourism

#creates it's own feedback loop

#leads to higher interest rates

#correlated with higher wages and increased hiring

#it can spur growth, particularly in consumer focused economy

Answer 2

cause of inflation : inflation is mainly caused by excess demand or decline in aggregate supply or output......before describing the factor.,that lead to raise in aggregate demand and decline in aggregate supply,we like to explain "demand-pull"and "cost-push" theories of inflation....

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