J.P. Morgan

  www.jpmorganchase.com
  www.jpmorganchase.com

Interview Question

Summer Analyst Interview

How will inflation affect the economy?

Answer

Interview Answer

1 Answer

0

When inflation affects an economy, to maintain the same level of living standards you would have to pay more. That is you would have to pay more for same amount of goods and services you had used prior to inflation. Remember, your income may not increase at the same rate as inflation. At the time of inflation, financial planning becomes difficult. The reason - the value of money decreases with inflation. It would affect the pensioners more than the ones who are currently employed. People tend to save less in an economy affected by inflation because the price of services and goods are ever time high and there is nothing or very less leftover income available to save.

Dan on Feb 22, 2011

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