Kavan Choksi Discusses When Inflation Is Good for the Economy
Inflation describes a situation where prices tend to rise. The Federal Reserve targets a gradual rate of inflation in the long-run. It believes that a slow increase in price level can help keep business profitable. It also prevents consumers from waiting for lower prices before making purchases. As per Kavan Choksi, inflation may erode the real value of debt over time. As a result, several types of borrowers, including businesses, may find it easier to repay loans as their nominal income grows with inflation, which lowers the real debt burden.
Kavan Choksi provides a brief insight into when is inflation good for the economy
If an economy is not running at capacity, it would mean that there are unused resources or labour. Theoretically, inflation may help increase production. After al...