Sunday, November 10, 2013

CHAPTER 10 QUESTION 7

I learned a great deal about inflation due to Chapter 10: that it's not necessarily a bad thing. It means that the value of the dollar is going down so we compensate for that by making goods and services more expensive while also increasing ones income/people are making more money. Sometimes things that were "cheaper" in the past are actually cheaper today once inflation is weighed into the equation. However, my question is, why do we have to have inflation? If inflation causes prices to rise but yet people are making more money, why don't we just equalize the goods and services being distributed and the amount of money people are earning - maintaining the dollars value and still distributing the same about of things?

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