What are the effects of inflation?

Inflation reduces the purchasing power of the money. Inflation reduces unemployment. The price of goods and services become more expensive. An inflation rate of 2% to 3% is good for the economy but higher rates of inflation can be very bad for consumers and the economy of a nation. High inflation rates will impact borrowing money, increase the cost of doing business, and will also increase the cost of living. You can read about Inflation in Economy- Types of Inflation, Inflation Remedies, Effect of Inflation in the given link.

Further readings:

  1. Indian Economy Notes for UPSC Civil Service Exam
  2. Monetary Policy – Objectives, Monetary Policy Committee, Instruments of Monetary Policy

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