Inflation:
A)has only costs.
B)has both benefits and costs.
C)just exists; it does not have benefits or costs.
D)has costs and benefits that generally offset each other.

Question

Quizplus · Accepted Answer

Inflation can have both benefits and costs. For example, moderate inflation can encourage consumption and investment, as people anticipate higher prices in the future. However, high inflation can erode purchasing power and create uncertainty in the economy, leading to negative impacts such as reduced savings and investment. Therefore, inflation is not purely detrimental or beneficial; its effects depend on its rate and the economic context.