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  • Inflation Er-WPS Office

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    abdiasmfwana
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    The document discusses how inflation reduces the purchasing power of money, leading to higher prices for goods and services which can negatively impact individuals on fixed incomes and businesses through higher costs and potentially lower profits or job losses. It also notes that inflation creates economic uncertainty that makes planning difficult and high unpredictable inflation can lead to instability and hindered long-term growth. During inflation, people need more money to purchase the same items as prices rise and may want extra cash on hand in case of further price increases.

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    1. Inflation Er-WPS Office

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    The document discusses how inflation reduces the purchasing power of money, leading to higher prices for goods and services which can negatively impact individuals on fixed incomes and businesses through higher costs and potentially lower profits or job losses. It also notes that inflation creates economic uncertainty that makes planning difficult and high unpredictable inflation can lead to instability and hindered long-term growth. During inflation, people need more money to purchase the same items as prices rise and may want extra cash on hand in case of further price increases.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    2 views1 page

    Inflation Er-WPS Office

    Uploaded by

    abdiasmfwana
    The document discusses how inflation reduces the purchasing power of money, leading to higher prices for goods and services which can negatively impact individuals on fixed incomes and businesses through higher costs and potentially lower profits or job losses. It also notes that inflation creates economic uncertainty that makes planning difficult and high unpredictable inflation can lead to instability and hindered long-term growth. During inflation, people need more money to purchase the same items as prices rise and may want extra cash on hand in case of further price increases.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    1. Inflation erodes the purchasing power of money, leading to higher prices for goods and services.

    2. It can reduce the real value of savings and fixed-income investments, impacting individuals on fixed
    incomes.

    3. Businesses may face higher costs, leading to lower profit margins or potential job losses.

    4. Inflation can create uncertainty in the economy, making it difficult for individuals and businesses to
    plan for the future.

    5. High and unpredictable inflation rates can also lead to economic instability and hinder long-term
    growth.

    During times of inflation, people may take more money to the market to account for the higher prices of
    goods and services. This is because the purchasing power of money decreases during inflation, meaning
    that the same amount of money can buy fewer goods and services than before. As a result, individuals
    may need to bring more money to cover the increased cost of items they wish to purchase. Additionally,
    people may also want to have extra cash on hand in case prices continue to rise or in case of unexpected
    price increases.

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