The Importance of Inflation

According to an article written by Rebecca Hellerstein published on the Federal Reserve Bank of Boston website, economists define inflation as a sustained rise in the general level of prices. High inflation is bad for the economy. High inflation adversely effects economic performance. Even moderate levels of inflation can distort investment and consumption decisions. Reducing inflation also has costs associated with the including lost output and higher rates of unemployment. The goal of the United States government is to maintain low and relatively stable levels of inflation in the 2 percent to 3 percent per year range

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Category: Economics -