Question

A moderate dose of inflation to necessary for the development of an economy. Briefly explain.

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

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

Answer 1

1. A mild inflation or creeping inflation is beneficial for economic growth. Increasing prices of goods and services generally lead to increase in the profit margin.
2. 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 essential for economic growth.