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Is inflation good or bad?

Presently Nigeria experiences high inflation level. Is it good or bad? Find out now.

In the modern world and economy, it is often possible to hear about inflation. What does it mean and what shortcomings or advantages does it have? Let's find it out.

Is inflation good or bad

Inflation definition

Inflation is an increase in prices for goods and services. Quantity of paper money became bigger at this case. Depreciation of currency happens because of it. The population buys fewer goods and sometimes wages grow down, not up.

Inflation definition

READ ALSO: Naira to dollar – Can CBN get inflation under control?

What is inflation in Nigeria?

Nigeria is the largest producer of oil in Africa. In spite of this, inflation in Nigeria in January has reached 9.6% against increase in prices for food and energy carriers. In March, it was at the level of 12.8%. Fuel crisis and Forex crisis make it higher every month.

What is inflation in Nigeria?

Inflation calculator

There are many inflationary calculators in the Internet. With their help, it is possible to estimate influence of inflation on the value of money and increase in prices over time, and to calculate a rate of inflation for any period.

Inflation calculator

Causes of inflation

The reasons of inflation are the following:

  • Reduction of final cost of all products at the invariable volume of money;
  • Growth of public expenditures due to printing of new money;
  • Excessive expansion of crediting of the companies and individuals;
  • Monopolism in economy (major companies have an opportunity to determine the cost of their production).
    Causes of inflation

Types of inflation

Depending on rates, people allocate the following types of inflation:

  • Moderate. Increase in prices makes no more than 10% a year. The cost of money remains. Contracts are signed in nominal prices. The economic theory considers such inflation as the best. It goes due to renewability of the range. It gives the chance to adjust the prices. This inflation can be regulated by the government and market.
  • Spasmodic. Increase in prices makes from 10-20 to 50-200% a year. People begin to consider increase in prices in their contracts. The population invests money in material values. This is the inflation, which is difficult operated. Monetary reforms are often carried out. These changes testify to the bad economy, leading to stagnation (economic crisis).
  • Hyperinflation. Increase in prices is more than 50% a month. Annual norm is more than 100%. Welfare even of reach people and normal economic relations collapse. This inflation is uncontrollable and demands emergency measures. As a result of a hyperinflation, production and an exchange stop, the actual volume of national production decreases, unemployment grows, the enterprises are closed and there is a bankruptcy of almost everything in the country.
    Types of inflation

Why inflation is bad?

Of course, this phenomenon has a set of shortcomings. Among them are:

  • Depreciation of money;
  • Inflation gets into all spheres of economic life and begins to destroy them;
  • The state, production, the financial market suffer from it, but people feel all the disadvantages most of all.
    Why inflation is bad?

Why inflation is good?

Some people believe that inflation has not only minuses, but also pluses. These are:

  • Revival in markets;
  • Increase of business activity;
  • Expansion of production and employment;
  • Increase in demand for actions.
    Why inflation is good?

Now you know what inflation is and why it is good or bad. 

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Expert
3 comments

Yes, yes it is, and the children need to know that inflation in any country causes an indelible material damage in economic terms. The country will not develop anything, because citizens will cease to operate, the shelves of supermarkets and market stalls empty. For food begins the real struggle. I could not agree with the previous speaker that the best stable, though not particularly good, but stable economical situation. Only then people can live normally. And then, not to live, to exist. So, I can say that inflation - is definitely bad!

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Newbie
Answered 1 year ago.

The Austrian school of Economics defines inflation as “an overall increase in the money supply” and not “General price increase”, as defined by the notion of inflation the Keynesian school. One of the consequences that may accompany inflation (and is sometimes confused with it), is the increase of prices, called price inflation. It can also occur as a result of “supply shock” when the market becomes available to fewer goods and services.

Deflation as opposite in nature phenomenon, is defined as a General decline in the money supply in circulation with the same available volume of goods and services in the market. And likewise, price deflation can occur as a result of growth in the supply of goods and services in the market.

Proponents of Austrian Economics believe that the prices generally reflect the supply and demand of money, goods, services and other assets in the economy. However, they recognize that daily prices are also influenced by many other factors. Price deflation can even occur during a monetary expansion, as well as after it.

Avatar
Student
Answered 1 year ago.

Inflation in any case, this is bad, because the country's economy falls, the currency depreciates, prices are rising, can only benefit the person who has a hard currency reserves, then yes you can and get well. But in any case, it is bad for ordinary citizens, first prices are high, and secondly shortages. Better to let it be normal and stable economy in the country than permanent currency jump and an unknown future. So as for me, because inflation is bad and nothing good is not. That is my opinion.

Avatar
Student
Answered 1 year ago.
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