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Inflation — Economics STD 10 — Question

ICSE BoardEnglish MediumSTD 10EconomicsInflation2 Marks
Question
How is running or hyper infiation harmful for the economy?
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Answer

Running a hyper inflation is harmful for the economy because.
(a) It reduces the purchasing power of money and hence the erosion of real income.
(b) It quickly devalues the local currency vis-a-vis other currencies in the foreign exchange market.

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