Conclusion – Effects of Inflation on the Economy
Inflation is good in moderation but largely has a negative impact on the economy. A low level of 2%-3% inflation is good for the economy but anything higher becomes detrimental. High inflation tends to feed on itself and this results in even higher inflation. It diminishes the purchasing power of the economy and depreciates the currency of the nation.
Effects of Inflation on the Economy
Effects of Inflation on the Economy: Inflation is the sustained rise in prices of goods and services over time. This leads to the erosion of purchasing power. Purchasing power is the value of a currency expressed in terms of the number of goods and services that can be bought by one unit of the currency.
During periods of rising prices, uneven inflation acts like a hidden tax, hitting certain groups disproportionately. This loss of buying power, particularly for those already struggling, is the most concerning consequence of inflation.
In this article, we will read about Inflation and mainly the effects of inflation on the economy. We will also discuss the types and causes of inflation.
Table of Content
- What is Inflation?
- Types of Inflation
- Causes of Inflation
- Effects of Inflation on the Economy
- Effects of Inflation on the Indian Economy