Answer to Question #10982 in Economics of Enterprise for Harry
explain the most important information you would require on which to base sound economic judgments. Explain your rationale
Inflation happens when the government increases the amount of money circulating in society while the amount of goods in circulation is less. When occurs, the dollar value goes down and prices generally rise in order to compensate loses (The Money Alert). Inflation may cause individuals to spend less therefore, lowering the economy. Some people may try to borrow money through loans, which is increasingly difficult during inflation periods. Banks do not like to give out money during inflation periods because the money they receive back may not be worth the same amount (The Money Alert). In today’s society, inflation has been a huge problem. Important information one would require to make sound economic judgment is if you are an investor, maybe consider inflation protection for your portfolios. If you do not invest, the best thing to do is to be prepared for times when prices may become inflated. More money may be spent on products, but the money will be available if you have enough money saved.