Question

If a country suffers from inflation, changes in will reflect changes in the price level in addition to any changes in output and so will overstate economic growth. is adjusted for price level changes and so this problem.

Answer 1

Answer:

The correct answer is GDP ; Real GDP ; Avoids.

Explanation:

The main consequence of inflation is the loss of purchasing power, which means that less goods and services can be purchased with the same amount of money because their price has risen.

The main effects of inflation are as follows:

1. Price increase that implies a loss of purchasing power.
2. Great uncertainty is generated that causes a significant decrease in investment in the medium and long term.
3. Speculative financial investments increase, which further destabilizes the situation.
4. The population tends to hoard due to concerns that prices will continue to rise.
5. Inflation is regressive, because its negative impact affects more those who have less economic resources because they do not have the elements that help to alleviate it.
6. Those who have debts to pay benefit from those who have to collect them (which are logically damaged) because the amount to be repaid is the same while the money is worth less.