Why is inflation good for an economy?
In: Economics
It’s more that deflation is very bad for an economy.
If my money buys me a better car in a year why buy a new car now? This logic applies as long as the value of my money increases and that will lead me to stop spending money which is very bad for the economy.
Inflation has the opposite effect. The same amount of money will buy me a worse car, or TV or what ever next year so I better buy it now. Keeps the money circulating which is good for the economy.
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