The impact of inflation People worry about their income during a period of hyperinflation because their real income will decline during this time. Effects on Income and Employment: Due to increased production, inflation tends to raise the total monetary income of the community as a whole.
Similar to how output increases, employment also rises as a result. The expansion of the money supply is what drives inflation in an economy. With more money competing for the same amount of commodities as before, prices rise as a result of greater demand.
Wide-ranging effects on output, wealth distribution, and the economy as a whole result from this decline in currency value and increase in the overall price level. These effects may be favorable or unfavorable, and they may differ depending on the group of people affected.
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