What are the advantages and disadvantages of inflation?
Answer:
Advantage - 1.people feel richer (money illusion)
2.unexpected inflation benefits borrowers
3.could be from extra growth in the economy or extra money which would lead to lower unemployment rates
4.if prices rise, then a currency devalues which would lead to growth in the export sector.
Disadvantage - 1.people who have signed labor contracts have seen a decrease in their real wage (the amount they can purchase
2.lenders will lose from arbitrary inflation
3.interest rates will feel pressure to change
advantage is lower the unemployment rate.
disvantage is that the money value will become more worthless
there is no advantage to inflation that I can see. I support going back to the gold standard and eliminating inflation all together
The answers post by the user, for information only, FunQA.com does not guarantee the right.
More Questions and Answers: