If inflation is roughly 2% per year, wouldn’t it eventually devalue like the Zimbabwean dollar?
In: Economics
No, because, at least in theory, the economy grows and wages increase, and there’s more wealth being created. This means that while things cost more than they used to, people have more money than they used to as well, so it roughly cancels out.
What you’re taking about with Zimbabwe his hyperinflation, where currency rapidly devalues and the economy doesn’t adjust accordingly.
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