Inflation

Inflation can be defined as the general increase in prices and fall in the purchasing value of money. Inflation is one of the economic indicators affecting economic growth. High inflation means low economic growth, and low inflation means high economic growth. There are several effects that caused by inflation. And they are the increase in unemployment, decrease in demand at the market, and a decrease in the business and consumer confidence to invest. Firstly, inflation can caused an increase in unemployment. Since the increase in price is making everything is more expensive, the economic activity is decrease since people couldn't afford to buy things for their needs. Because of it, business institutions have to let go some of their labours to close the losses that were made. Secondly, the demand in the market will fall since as stated before, poeple couldn't afford to satisfy their needs. In addition, this effect will also make the economic growth is falling. And lastly, inflation also make the business and consumer confidence to invest is dropping. In short, it means that the interest rate in the market is decreasing. Since that, it also support the economic activity to go down. In conclusion, there are 3 effects of inflation that could happen. And they are the rise in unemployment, decrease in demand, and the decrease in the interest rate.