Question

Positive and negative impacts of inflation upsc answer

Answer 1

Explanation:

Deflation is potentially very damaging to the economy and can lead to lower consumer spending and lower growth. ... If there is deflation, the real value of debt increases leading to a squeeze on disposable incomes.

Answer 2

Answer:

The negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future.