Question

Does inflation cause a change in demand? Explain the role of inflation in determining demand.

Answer 1

Answer:

Inflation is the economic process by which there is a constant increase in the prices of the different goods and services that exist in the market. Thus, people need greater amounts of money to access goods and services, with which they can purchase a smaller amount of these. Therefore, there is a drop in demand, as the population consumes less due to their loss of purchasing power for the goods and services found in the market.