" To what extent can inflation be considered a good thing for a growing economy?"
Inflation is defined as a general increase in price level of products and services. Many people believe that inflation is a bad thing; as the inflation rate increases, the rate of unemployment also increases because the wages tend to increase as the cost of living is increasing so people would demand for higher salary as well. Minimum wages raises, unemployment increases as firms face with difficulties to pay workers with minimum wages and eventually they would lay off many workers. That's the most basic pessimistic idea about increasing in inflation. But what the inflation actually tells us? On the other hand, if we are to think about what is a good effect of high rate of inflation, high inflation indicates that the economy is "GROWING"!. It can be observed that the price level has increased because too many people ( who hold the power of affording) pursue for the small amount of goods. Here's just a simple thinking --- many people demand for the same product hence the product price would eventually rise! When price level increases, the firms would face with higher cost of producing, thus would increase the goods' price in order to maintain the operation ( pay for rents/ wages/ higher taxes etc.).
Inflation is defined as a general increase in price level of products and services. Many people believe that inflation is a bad thing; as the inflation rate increases, the rate of unemployment also increases because the wages tend to increase as the cost of living is increasing so people would demand for higher salary as well. Minimum wages raises, unemployment increases as firms face with difficulties to pay workers with minimum wages and eventually they would lay off many workers. That's the most basic pessimistic idea about increasing in inflation. But what the inflation actually tells us? On the other hand, if we are to think about what is a good effect of high rate of inflation, high inflation indicates that the economy is "GROWING"!. It can be observed that the price level has increased because too many people ( who hold the power of affording) pursue for the small amount of goods. Here's just a simple thinking --- many people demand for the same product hence the product price would eventually rise! When price level increases, the firms would face with higher cost of producing, thus would increase the goods' price in order to maintain the operation ( pay for rents/ wages/ higher taxes etc.).