Question

Based on cost of inflation, Agree or disagree with this post and why

When prices rise, buyers pay more for the things they want. On the other hand, the sellers are getting more money for the things they sell. Many people earn money by selling their services whether its labor or goods. Their rise in income from the inflation evens out with the inflation of prices when they buy things. You also have menu costs, the cost of changing the prices because of the inflation. Shoe leather costs are the resources wasted when inflation encourages people to reduce their money holding. Taking so many trips to the bank to get money can be a hassle. Taxes can become problematic because the tax codes don’t take into account changes in inflation which when selling your stock. I think the tax code would be the most important because it can affect your investments and savings.

Answer 1

there are many cost associated with inflation, the volatility of price, rate of interest and also exchange rate makes life difficult for people. though its not good for the economy it is not bad either if its not alarming. inflation gains some and losses some. like the wage and constant income earners like govermnet servents loose because of inflation. but at the same time business man earns as they sell there product at a high price. and yes its true to say that the menu cost and shoe leather cost are associated with inflation which are the unnecessary cost which a person has to incurre because of inflation. and the tax code is also problematic as it doesnot take into account the inflation in the economy. inflation simply increases the price level and makes the currency of the country less valuable in terms of other currency. export becomes cheaper while import becomes deerer which has both good and bad effect because if people reduce inflation its good if not then the current account deficit willincrease which is bad for the economy.