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>> No.73318439 [View]
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73318439

>>73318388
>he thinks inflation should discourage me from investing

Lmao, let me explain this simple for you. Example, individuals with tangible assets, like property or stocked commodities, may like to see some inflation as that raises the value of their assets which they can sell at a higher rate. However, the buyers of such assets may not be happy with inflation, as they will be required to shell out more money.

People holding cash may also not like inflation, as it erodes the value of their cash holdings. Inflation promotes investments, both by businesses in projects and by individuals in stocks of companies, as they expect better returns than inflation.

However, an optimum level of inflation is required to promote spending to a certain extent instead of saving. If the purchasing power of money remains the same over the years, there may be no difference in saving and spending. It may limit spending, which may negatively impact the overall economy as decreased money circulation will slow overall economic activities in a country. A balanced approach is required to keep the inflation value in an optimum and desirable range.

High, negative or uncertain value of inflation negatively impacts an economy. It leads to uncertainties in the market, prevents businesses from making big investment decisions, may lead to unemployment, promotes hoarding as people flock to stock necessary goods at the earliest amid fears of price rise and the practice leads to more price increase, may result in imbalance in international trade as prices remain uncertain, and also impacts foreign exchange rates.



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