Anticipation of inflation discourages
1) saving
2) borrowing
3) lending
4) purchasing goods

Question

Anticipation of inflation discourages​
1) saving
2) borrowing
3) lending
4) purchasing goods

Quizplus · Accepted Answer

Anticipation of inflation leads to a decrease in the purchasing power of money in the future. This, in turn, discourages people from saving their money as they feel that they will be able to buy fewer goods and services in the future because of inflation. Similarly, people are also discouraged from lending their money as they may not get back the same purchasing power due to inflation. However, borrowing becomes more attractive during inflation as the value of money is expected to decrease in the future, making it easier to repay loans with cheaper currency. Purchasing goods may become more attractive during inflation as prices are expected to increase in the future, making it more expensive to buy goods later.

Anticipation of Inflation Discourages​

Anticipation of Inflation Discourages