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why is inflation so widely feared?

During inflationary times, prices increase, but wages often don't go up as fast as prices.

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Inflation is a major disadvantage to certain groups.

Keep in mind the major element in the definition of inflation is rising prices.

One group that it harms are those who are on fixed incomes. Inflation means that the prices that people pay for necessities such as rent, ford clothing and in today's time gasoline goes up. At the same time their fixed income(money) remains the same. These people, therefore, find that they can buy fewer goods and services with the money that they receive.

Another group that is harmed are those who are creditors. These are the peopleor institutions to whom money is owed. When the debts are paid back they are paid back with money that is worth less (cheap money).

There are other effects of inflation such as rising interest rates and the stock and bond markets,

Bear in mind that some groups benefit from the rise of prices.

  • eco -

    inflation is a decrease in the value of the money supplie. Like the Federal Resevere printing money.

  • algebra -

    Bayside insurance offers two health plans. Under plan A, Giselle would have to pay the first$70 of her medical bill, plus 30% of the rest. Under plan B, Giselle would pay the first$250, but only 25% of the rest.For what amount of medical bills will plan B save Giselle? Assume she has over $250 in bills.Giselle would save with plan B if she had more than $? in bills.

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