Why do governments aim to have a stable inflation rate?

Social Studies

1 answer:

vovikov84 [41]3 years ago

6 0

Answer:

A low inflation rate promotes the efficient use of productive resources. When inflation is high, a substantial quantity of individual people's time and resources from the economy are invested in searching for mechanisms to defend themselves from inflation. So , for example when the inflation is high, businesses have to channel more resources into portfolio management in order to avoid financial losses. This is an inefficient use of productive resources that do not generate wealth to society.

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