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Inflation is a sustained increase in the price level. The increase is continuous and reflects increases in the average of general prices.
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Inflation is a sustained increase in the price level. The increase is continuous and reflects increases in the average of general prices. The issue of inflation is universal and commonly discussed and assessed by economists. Through extensive research and analysis, many efforts have been made to fully understand the costs to and effects on the economy. Whilst there is a general consensus among economists that inflation is a negative force in the economy, much conjecture has arisen questioning the extent and significance of inflationary impacts on the economy and policies that can control it. There are several costs to the economy that are a direct result from periods of inflation. These include resource misallocation, capital misallocation, transaction cost such as shoeleather costs and menu costs, arbitrary redistribution of wealth and income, tax liabilities, increased uncertainty, confusion and inconvenience. Each of these will be elaborated on throughout the paper. These costs not...
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