| A&A Morning Glory Learning Sdn Bhd |
Economic Effects of Inflation
Related Links
Trade Deficits Inflation is likely to harm our ability to compete overseas. When there is a significant level of inflation, domestic exporters find it difficult to compete with other countries. Moreover, as domestic prices are relatively more expensive than the overseas’, the Malaysian will tend to switch to those cheaper imported goods and services. Hence, when imports are more than exports, trade deficit exists. Business Confidence Falls High inflation will lead to higher cost of doing business. This will reduce the incentives to invest and may lead to higher level of unemployment rate. Moreover, consumers are not willing to spend which results in the lowering of the level of economic growth (or GDP) in Malaysia. Income Distribution Inflation favours those with assets that rise in value with inflation such as land, antiques, gold and shares. The rich have both the wealth and the expertise to buy assets that will increase in value with inflation. The poor are more likely to have cash savings which lose value in inflation. Hence, in times of inflation, tend to create greater income disequality in the country. |
| Copyrights 2005 by A&A Morning Glory Learning Sdn Bhd. All Rights Reserved. |
 | |  | |  | |  | |  | |  | |  | |  |
