ELi5: Why is inflation so important for the economy to go?

Question

I meant Grow*

In: Economics

Answer 1

From my econs class, inflation occurs when aggregate demand (total demand) increases, total demand = more people spending/buying = economy growing. On the graph as AD increases it shows the price will go up = inflation. But this is from a economic theory perspective. Other factors are important when it come to determining whether the inflation is actually beneficial to the economy. The best is a low steady inflation rate.