Why is inflation considered a problem?
A) Firms gain too much economic power.
B) It is always very high when it exists.
C) People prefer falling prices.
D) It is costly for society.
E) Government gains too much economic power..

Question

Quizplus · Accepted Answer

Inflation is considered a problem because it leads to rising prices of goods and services, which reduces the purchasing power of consumers, especially those with fixed incomes. This can lead to a decrease in consumption, reduced economic growth, and increased social inequality. Additionally, inflation can lead to rising interest rates, which can increase the cost of borrowing and reduce investment, leading to a slowdown in economic activity. All of these factors combine to make inflation a costly problem for society.

Why Is Inflation Considered a Problem