Question

explain the effects of inflation (for 5 mark)​

Answer 1

Answer:

*Decreasing of purchasing power *Acceleration of poverty * Hunger. *Decreasing of economical status of the country

Answer 2

Explanation:

effects of inflation -- Inflation may or may not result in an increase in production

As long as the economy does not reach the full employment stage, inflation has a favorable effect on production

Usually, as the price level increases, profits increase too

During inflation, businessmen tend to raise the prices of their products to earn better profits

However, if the wages and production costs start rising rapidly, then this favorable effect of inflation does not last long

If the inflation in an economy is of the cost-push type, then the inflationary situation usually leads to a fall in production