Inflation 1 Inflation is the general increase in prices with some prices rising faster than average and even some prices falling Inflation attracts a great deal of attention among policy makers and...

Inflation

1 Inflation is the general increase in prices with some

prices rising faster than average and even some prices falling Inflation

attracts a great deal of attention among policy makers and some of the remedies

for it can have serious consequences in production and employment Why would

you, as a business manager, care whether annual inflation is 2% or 20%?

2 What are some of the damaging effects deflation has on an

economy? What would be a monetary policy prescription to reduce or eliminate

deflation? How would deflation affect your business?