Inflation and the common man. How inflation and monetary policy can affect the common man?

1 ANSWERS

1. Guest40
   

   Inflation is greatly affecting common man. In the recent days the cost of all his daily needs like rice, pulses, vegetables, etc., have increased in such a way that the common man has to think twice, before buying even vegetables.
   
   The most immediate effects of inflation are the decreased purchasing power of the dollar(Monitory Unit) and its depreciation. This is especially hard on retired people or government servants with fixed incomes because their money buys a little less each month. Those not on fixed incomes are more able to cope because they can simply increase their fees.
   
   Furthermore when inflation occurs, people tend to spend less meaning that factories have to lay off workers because of a decline in orders.
   
   Inflation also alters the distribution of income. Lenders are generally hurt more than borrowers during long inflationary periods which means that loans made earlier are repaid later in inflated dollars.

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