Respuesta :
A general increase in prices over time diminishes customers' purchasing power because a constant quantity of money will eventually allow for less consumption. Whether inflation is running at 2% or 4%, consumers still lose purchasing power; they just do it twice as quickly at the higher rate.
What is inflation?
The rate at which prices increase over a specific time period is known as inflation. Inflation is often measured in broad terms, such as the general rise in prices or the rise in a nation's cost of living.
What happens if the US inflation rate increases?
A general increase in prices over time diminishes customers' purchasing power because a constant quantity of money will eventually allow for less consumption. Whether inflation is running at 2% or 4%, consumers still lose purchasing power; they just do it twice as quickly at the higher rate.
The exchange rate is mostly impacted by inflation, which has an effect on imports and exports. High interest rates are a result of high inflation, which weakens the currency. Increased inflation will also have an impact on exports by directly impacting the cost of goods like labor and materials.
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