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The positive and negative effects of inflation.
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[QUOTE="TOZZIBLINKZ, post: 218062, member: 37528"] Inflation to some extent is considered as a disadvantage , but if seen correctly from a particular angle it could also be considered as an advantage . to those not familiar to what an inflation is , it's simply refers to the persistent rise in the general price level of goods and services . it is important to know that inflation occurs when volume of purchases is currently running ahead of production , in a lay man understanding it refers to the situation where too much money in circulation are chasing too few goods . In a particular country inflation occurs as a result of increase in demand , low production increase in salaries and wages , war , high cost of production , population increased , excessive bank lending , budget deficit , inadequate storage facilities , and money laundering etc . MERITS OF INFLATION : As as a result of inflation they debtors gain because there is too much money in circulation which will enable them to pay their debt with ease , because of inflation producers are selling their goods at higher price which will lead to higher profit making , as a result of high volume of money in circulation government is able to gain high yield from taxes . DEMERITS OF INFLATION : One major negative effects of inflation is that it discourages the habit of saving , because people spend more leading to low or no savings , also inflation redistribute income haphazardly . and there is no fault in real-time conversations of those on fixed income e g pensioners . [/QUOTE]
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The positive and negative effects of inflation.
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