Answer to Question #10982 in Economics of Enterprise for Harry

Question

explain the most important information you would require on which to base sound economic judgments. Explain your rationale

Answer 1

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.