Suppose a Keynesian economist recommends a combination of tax increases and spending cuts. This recommendation is most likley an attempt to address high inflation.
How do you explain high inflation ?
- Accordingly, high inflation is characterised by extremely high costs for commodities and items. As a result, consumers may buy things for less money. Although a little inflation might be beneficial, depending on the situation, it can also harm people's money.
- The anticipation that inflation could begin to drop is now beginning to materialise. According to the Labor Department, the consumer price index (CPI) for October increased 7.7% over the previous 12 months, which is 0.5% less than the number for September.
- To return price growth to normal, there is still a long way to go. The CPI increased 0.4% month over month in October, matching the monthly increase from September.
- Your purchasing power is negatively impacted by inflation, which is its most obvious effect. Your standard of living will ultimately decline if you are unable to purchase as many products and services as you were able to before inflation.
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