deflation is one way you can avoid the opportunity cost of inflation and unemployment.
deflation is one way you can avoid the opportunity cost of inflation and unemployment.
what are some ways you can avoid the opportunity cost of inflation and unemployment?
deflation
inflation affects economies in various positive and negative ways. the negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future. positive effects include reducing unemployment due to nominal wage rigidity, allowing the central bank more leeway in carrying out monetary policy, encouraging loans and investment instead of money hoarding, and avoiding the inefficiencies associated with deflation.
inflation
if someone loses the opportunity to earn money, that is part of the opportunity cost. if someone chooses to spend money, that money could be used to purchase other goods and services so the spent money is part of the opportunity cost as well. add the value of the next best alternative and you have the total opportunity cost. if you miss work to go to a concert, your opportunity cost is the money you would have earned if you had gone to work plus the cost of the concert.









































section::::example.
opportunity cost