Inflation: Popping the Bubble (Part 2) General Finances
By JingCheng Woo, 13th July 2018

In Part 1, we talked about what inflation is and how it works.

Since inflation means that the prices of good goes up, does this mean that inflation is bad for our economy and should be avoided at all costs?

Inflation is often known as the necessary evil of the economy. Economists argue that a controlled rate of inflation actually has a positive effect on our economy if it supports economic growth.

Inflation supports Growth

Inflation is the result of increase in demand of goods and services in the economy. This could also mean that there is an increase in consumers’ income and decrease in interest rates from commercial banks. The demand in goods also could cause the price to increase and firms would increase their production in future to meet the expected demand in order to