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Discuss the effects of inflation. (10 marks)

Discuss the effects of inflation. (10 marks)

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Meaning of inflation

It is the term of economic which reads as - rise in the cost of the services and goods which are of common use. FOR EXAMPLE - Housing, Food, Clothing etc.

Effects of inflation.

  1. It declines unemployment, this is because wages changes in a very slow manner with the response to the shift of economic. UnemUnemployment thickens because the workers suffer from pay cuts and might remove from their jobs also.
  2. Inflation might increase the growth because the central bank usually pulls up the rate of interest, also discourages the saving and in the short-run boost in the spending leads towards the growth.
  3. Because of inflation, people might lose faith as well. and this is something which causes a crisis like a political crisis or economic crisis etc.
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