Question

How is running or hyper inflation harmful for the economy?

Answer 1

1. Reduces the purchasing power of money, making goods and services unaffordable.
2. Raises the cost of production, reducing business profits and production.
3. Discourages savings and investment because the value of money falls rapidly.
4. Creates economic uncertainty, affecting business planning and growth.
5. Increases inequalities as fixed-income groups and low-income people suffer the most.