Inflation Isn't Costly Just Because Prices Are Going Up

question 89

Essay

Inflation isn't costly just because prices are going up. After all, inflation means salaries and wages are going up as well. If higher prices are not the problem, discuss two important aspects of inflation that are costly.

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Definitions:

Net Present Value

The distinction in present monetary value between incoming and outgoing cash over a designated interval.

Investment Opportunities

Potential prospects or ventures that could yield financial returns or profits for investors.

Cash Savings

Funds that are kept on hand or in a bank account and are readily available for use in emergencies or for future purchases.

Simple Rate of Return

The percentage of annual incremental net operating income to the initial investment cost.