2.5 Economic Growth 0.0 / 5 ? EconomicsEconomic GrowthASEdexcel Created by: tomstodd23Created on: 14-05-18 11:43 Inflation Cost- Shoe Leather Costs Stable prices make consumers and firms able to have some knowledge of what a fair price is and which suppliers are cheaper. 1 of 7 Inflation Cost- Menu Costs Inflation causes restaurants to change menus to show increased prices. 2 of 7 Inflation Cost- Psychological and Political Costs Price increases are unpopular and make people feel less wealthy. 3 of 7 Inflation Cost- Redistributional Costs Inflation can redistribute income and wealth between economic agents, and anyone on a fixed income will suffer. 4 of 7 Inflation Cost- Unemployment and Growth Inflation is typically unpredictable and therefore firms will be less willing to take risks and invest in an unstable economy. 5 of 7 Inflation Benefits Real value of debt falls (consumers); real wages could fall (firms); Real value of public debt falls (Gov); New employment opportunities. 6 of 7 Quantitative Easing Where a central bank purchases government securities in order to lower interest rates and increase the money supply. 7 of 7
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