Economic Growth: The Effects Of Inflation And Economic Growth

Inflation and Economic Growth: The Effects of Inflation on Economic Growth

Aboki Gazali Usman

Master of Business Administration, Faculty of Business and Accounting

Infrastructure University Kuala Lumpur IUKL

1.0 Abstract:

In the form of economic, Inflation is refers to rate or percentage which indicate the level increase in price of goods. This means inflation is commonly refers in the rising in price levels of product and services or could be in the money supply rising, basically, inflation occurs more in prices than other standards, thus If the money supply has been money supply been raised up this shall clearly explain price level. Today many countries in this world are suffering because of slowed economy growth that lead to unstable

On this case inflation and economic growth are related terms with a common contention relationship, because there is a positive and important link and as well negative ones between inflation and economic growth. Thus, high inflation is extremely affect the economy in terms of bad performance, because high inflation cause a lot of issues such as it can decrease the purchasing power of the dollar and increase wages which will lead the numerous people’ income become less sufficient to them and cannot afford to satisfy their need and wants, and it cause transaction movement in the market become slow and shortage of necessity products and services, and when high inflation affect price level is giving a hard time, a very complicated situation that can make hardly to forecast future market behavior precisely. This condition is also lead up to business investment become slows. Basically high inflation gives a government, economist a hard time to dominate and standardize the inflation rate. And on the other hand, too low or decreasing inflation can also affect economy in term rate of employment and high output. But low