Why moderate inflation is good for the economy?

Answer 1

A moderate inflation can act as an incentive for producers to increase output since goods are more expensive and will increase revenue and profit.

With inflation taking place, the value of properties will appreciate.

If the demand for a country's exports is inelastic, then it will most probably bring about a current account surplus since trade partners still import goods from the country though goods are more expensive.

Usually, a high interest rate will accompany inflation as to keep inflation under control, this condition will attract hot money into the money as it will yield higher returns. Thus, appreciating the exchange rate of the country.

Answer 2

Moderate Inflation

Answer 3

I think my thinking might be off from the rest of the world's, but isn't inflation what Russia has, where they spend like $1,000 on a loaf of bread, but their $1,000 would equal $3 here? In my mind, that is not a good thing. The dollar looses value more and more. Look at the economies of other countries who have gone through crazy inflation. That will show us where we are headed, whether for bad or good. In my mind inflation is only good for people who are getting the extra profit from the higher prices, which is usually the minority of the country.

Answer 4

Inflation fluctuates and deflation is bad for the economy, so by having modest inflation you prevent deflation. When there is deflation there can not be low real interest rates because just siting on your money yield a positive return and high real rates slows economic activity.

Answer 5

1

Answer 6

Friend,this may help, see below link

Answer 7

law of supply & demands

Answer 8

read
http://www.brookesnews.com/062711inflation.html

take care
amal

visit my blogs
http://www.taketheleadhere.blogspot.com/
http://www.taketheleadheremam.blogspot.com/
http://www.lakinfo1.blogspot.com/