Tuesday, July 31, 2012

Whether or not inflation is always bad? Justify your answer

Inflation isn't an unmixed blessing. It’s both sensible & bad result.

The goods effects are:

• People with versatile income (producers, traders etc.) sometimes gain.

• The entrepreneurs earn higher profit.

• Debtors are gainer.

• New employment opportunity rise.

• Purchasing power rises

• Unemployment reduces.

Bad effects of inflation are:

• People with fixed income lose.

• Creditors losers

• Inflation encourages, hoarding & develops a synthetic scarcity of in the market.

• Declining price of cash in inflation makes some folks careless in spending.

From the above discussion it is proved that though inflation has some bad result but it stimulates economic growth & creates employment opportunity, raises purchasing power. We should keep inflation in tolerable position to promote economic growth and living standard. Therefore inflation isn't always bad.

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