How does inflation impact the economy?

How does inflation impact the economy?

Inflation affects the economy by reducing purchasing power, increasing costs of goods and services, and influencing interest rates.

Can you explain how it affects consumers specifically?

Sure! For consumers, inflation means that their money buys less than before, leading to higher costs for everyday items.

What about businesses? How do they cope with inflation?

Businesses may raise prices to maintain profit margins, cut costs, or find efficiencies to cope with rising expenses.

Does inflation have any positive effects?

Yes, moderate inflation can encourage spending and investment, as people are more likely to buy now rather than later.