Author Question: Many economies have seemed to get by even in the face of inflation rates in the thousands. How would ... (Read 196 times)

stephzh · **on:** Jun 30, 2018

Many economies have seemed to get by even in the face of inflation rates in the thousands. How would you nevertheless explain the fundamental harm done by high inflation?

What will be an ideal response?

Question 2

The market price of one currency in terms of another currency is also known as

A) the exchange rate between those currencies.
B) the future rate between those currencies.
C) the spot market.
D) the value of arbitrage.

DylanD1323 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

The fundamental issue is the role of money in providing an efficient economy. To the extent that the value of money cannot be relied on to be relatively constant for long periods, various economic actors must rely on less efficient forms of exchange and spend considerable resources trying to protect themselves from the impact of inflation. Resources tend to move into less productive assets and activities.

Answer to Question 2

A