Why are economists concerned about inﬂation?
A) Inﬂation generally causes unemployment rates to rise.
B) Real GDP is necessarily falling when there is inﬂation.
C) Inﬂation lowers the standard of living for people whose income does not increase as fast as the price level.
D) Inﬂation increases the value of people's savings and encourages overspending on goods and services.

Question

Quizplus · Accepted Answer

Economists are concerned about inflation because it lowers the standard of living for people whose income does not increase as fast as the price level. Inflation erodes the purchasing power of money, meaning that prices increase while the value of money decreases. This can make it harder for people to afford basic necessities and can lead to social unrest.

Why Are Economists Concerned About Inﬂation