In this task you will participate in a discussion forum, in which you answer sev

Question

In this task you will participate in a discussion forum, in which you answer several questions, based on the following premise:

In economic activity moments of inflation occur. In general, inflation is an economic condition that is controlled through economic policy.

Answer the following questions in the forum related to the stipulations above:

Do you think we should try to control inflation or should we let the market take charge of reducing price levels? Explain your answer

Is it possible that in the economy some economic entities benefit from inflation?Explain your answer

Explanation / Answer

We should control Inflation rather than leaving it to the market because a lot of other economic factors like unemployment rate,wage rate, production, consumption are affected by Inflation.If Inflation is severe the economy becomes unstable.Moreover,a policy to control Inflation works faster than the process of market adjustment.

Entities who benefit from Inflation-

Borrowers because the value of their loan amount falls in Inflation.

Gold dealers-People's investment in gold increases in times of Inflation because people consider it as an insurance against Inflation.

Consumer Staples because these companies shift the burden of price rise entirely to the consumers.

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