Question

Why is creeping inflation considered good for an economy?

Creeping inflation is regarded essential for economic growth. Give reasons.

A mild inflation is beneficial for economic growth. Justify the statement.

Answer 1

It is regarded as safe and essential for growth because it keeps the economy away from stagnation.

Answer 2

A mild inflation or creeping inflation is beneficial for economic growth. Increasing prices of goods and services generally lead to an increase in the profit margin. This induces the producers to undertake more investment. As a result, the level of output and employment increases in the economy. In this way, mild inflation is regarded as essential for economic growth.