Government and economists say, that ideal inflation is about 2%.. why is that? Why is 2% of my savings disappearing every year good? (In ideal case)
In: Economics
People spending money is a requirement to keep the economy running at a steady pace.
If prices stay the same or decrease over time, people will be less likely to spend money. Without revenue, businesses can’t pay their employees salaries, if employees don’t get paid, they can’t consume it, etc. Eventually, the economy will slow down and nothing will get done.
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