Why is it important to control inflation?

Question

Quizplus · Accepted Answer

The Answer is

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Consider the definition of inflation.

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Adverse effects of an increase in inflation on output and employment, i.e. price system may become less efficient as a coordinating mechanism; increased uncertainty may cause a fall in consumption and investment; potential adverse effect on international competitiveness.

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Low and stable inflation conducive to increased business activity.

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Distributive effects, i.e. arbitrary and unplanned changes in the distribution of income and wealth.

Why Is It Important to Control Inflation