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High and unexpected inflation has a greater cost

November 19, 2021 by moyways Leave a Comment

This type of high and unexpected inflation will reduce the purchasing power of money saved by savers. Hence, it will have a negative impact on savers.

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  • High and unexpected inflation
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High and unexpected inflation

The creditors gain when the value of the money lent to borrowers rises.

This type of inflation will reduce the purchasing power of money saved by savers. Hence, it will have a negative impact on savers.
This type of inflation will reduce the purchasing power of money saved by savers. Hence, it will have a negative impact on savers.

Firms are unable to offset these costs in the short run due to all these costs. Firms are unable to offset these costs in the short run due to all these costs similar to what happened in the inflation of the 1970s.

Real interest rates after taxes are what savers prefer.

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