Inflation can erode the purchasing power of money from "summary" of Economics of Money, Banking and Financial Markets, Business School by Frederic S. Mishkin
The erosion of purchasing power caused by inflation is a fundamental concept in economics. When prices rise across the economy, the value of money decreases. This means that the same amount of money can buy fewer goods and services than before. In other words, inflation reduces the real purchasing power of money. As inflation continues over time, its effects can be far-reaching. Individuals may find that their salaries are not keeping up with the rising cost of living, leading to a decrease in their standard of living. Similarly, savers may see the value of their savings diminish as prices increase. This can have serious implications for people's ability to afford necessities and maintain financial stability. Businesses ar...
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