Question
Which of the following can be the outcomes of very high
inflation in the economy? (1) Reduction in economic growth (2) Increase in savings (3) Reduction in exports Select the correct answer using the codes below :Solution
Inflation is a persistent increase in the general price level of goods and services in an economy over a period of time . When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value .High inflation means excessive supply of money and thus leads to rise in the cost of credit and interest rates.
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The process in which certain types of assets are pooled so that they can be repackaged into interest-bearing securities is called:
