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Sample Critical Thinking Paper on Negatives Associated With Inflation

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Sample Critical Thinking Paper on Negatives Associated With Inflation

There are several negative effects of inflation as discussed below. First, inflation retard expansion and improvement of the economy. The wide-ranging amplify in prices of commodities and services reduce the demand of merchandise hence business activities go down. Some businesses are forced to close or retrench their workers to be able to meet the current expenses. Thus, it affects the societal standing of the population where workers lose their job. To make ends meet, retrenched workers engage in crime. In addition, workers feel psychologically disturbed due to their joblessness status.

 Extending this to society, members lose hope with their administration an action that may contribute to the enlargement and materialization of revolution or an uprising. Second, consumers of goods reduce their budget in a great way hence affects the activities of suppliers. Most suppliers will order a lesser amount of supplies and services from manufacturers. The maker or producer of certain product will on their hand decrease the volume of goods traded. In case of farmers, produce coming from their farms will be sold off at a throw away price. It discourages planters from assigning budget to these activities as well as rendering losses for goods sold. At the same point, some companies will also find difficulties coping with the cost of operation and production of goods and services.

Importers on the other side will have an easy time selling their products in the local market because they are cheaper than locally produced products. The action significantly affects local businesses where some of the industry close their operation and leave for other countries. Freight of capital is detrimental to the whole economy as a country will collect less tax to be used for capital development.

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