Inflation
a) Explain why it can be said that “Inflation is always and
everywhere a monetary phenomenon.
b) Outline the costs and benefits of inflation. (expected and unexpected inflation )
c) Show that hyper-inflation although a monetary phenomenon is
usually associated with fiscal problems.
Especially the third one is i cant get my around it. Thanks for you help.
✅ Answers
? Best Answer
b. One benefit of inflation is that a country’s goods become cheaper relative to those of other countries. This will stimulate the export industry and spur domestic jobs. However, inflation increases the price of many goods. If wages do not keep up, the standard of living will decline.
c. Hyperinflation is an excessive amount of inflation that causes serious problems to the economy. For example, Germany, following World War I, was forced to pay huge reparations. It began printing money like crazy, resulting in the devaluation of its citizens’ net worth. The result was social, political, and economic crisis that allowed Hitler to rise to power.