Inflation
Inflation is defined as a sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase. As inflation rises, every dollar you own buys a smaller percentage of a good or service. The value of a dollar does not stay constant when there is inflation. |
Advantages• Deflation is very harmful to a working economy
• It enables prices to be adjusted • It enables wages to be adjusted • Can boost economic growth |
Disadvantages• It discourages investment
• It makes the economy noncompetitive • It reduces the values of savings |