Is Inflation Good Or Bad Essay - 1164 Words

Lauren Busbee Period 3 November 29, 2016 Is inflation good or bad? Inflation is the increase in the cost of goods and services while the amount of goods and services purchased decreases. When the price of goods and services increase and wages and salaries do not increase at the same rate, an individual has less available cash to spend. The result is a reduced value of the dollar. A declining value of the dollar gives the consumer less spending power and fewer goods and services are purchased. While initially during times of inflation there is less money being spent, the end result of inflation can be good. Historically, the United States has experienced many periods of inflation. In general, there are three factors which can cause inflation. These factors are supply and demand, cost-push and money supply expansion. With supply and demand, when the demand for particular items is great, the price for those items increases. The newest Apple iphone is an example of this. Demand for the newest iphone is always high. In order to ensure its inventory is not totally depleted, Apple keeps the price of its phone high. In addition, Apple recognizes that the consumer is willing to pay a higher price for their product. On the other hand, â€Å"cost-push inflation happens on the supply side. Sellers raise their pricing in order to cover their increased production costs such as labor and components of the items they produce.† Money supply is a method implemented by theShow MoreRelatedInflation Is A Low Rate Of Inflation1726 Words   |  7 Pageshas a high rate of inflation, that means peo ple who live in this country are sad. Inflation has many definitions, but most of these definitions are related to one concept which is inflation is a general increase in prices and fall in the purchasing value of money. There is no doubt about that inflation is an important key concept in economics. 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