Inflation's Ripple Effects Disrupt Markets and Weaken Economy
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High inflation reduces consumer wealth and forces frequent wage negotiations and coping efforts. This disrupts markets and reduces purchasing power.
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Sticky wages and taxes mean that some workers and investors lose purchasing power from inflation. This reduces economic activity.
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Sticky prices cause some businesses to change prices faster than others, distorting consumer decisions.
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Interest rates may lag inflation, reducing lender profits. This scales back lending.
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Inflation may shift investments from stocks to real estate. This raises business costs and lowers productivity and wages.
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