Why is inflation good for an economy?
In: Economics
In an ideal world there would be no inflation and prices would remain constant at all times. Unfortunately, due to supply and demand, inflation is inevitable and will fluctuate as items levels of supply and demand change. There are other reasons why inflation occurs but supply and demand is the main one. So, governments often target a low level of inflation so that it does not get out of hand. This keeps prices generally stable and allows people, governments and corporations to plan ahead.
So, inflation is not good but a low and stable level of inflation is better than an inflation rate that wildly fluctuates.
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