Home | Forums MBA Managerial Economics Discussion Forum Reply To: MBA Managerial Economics Discussion Forum

  • Bachevinder Singh A/L Param Singh @ Bob

    January 26, 2022 at 3:41 pm

    Hi Lik Wai. Yes agree with you as this three factors actually really plays an important role in business decision making environment as it really interrelated. Over time, the growth in GDP causes inflation. Inflation, if left unchecked, runs the risk of morphing into hyperinflation.

    For example, in a world where inflation is increasing, people will spend more money because they know that it will be less valuable in the future. This causes further increases in GDP in the short term, bringing about further price increases. Also, the effects of inflation are not linear. In other words, 10% inflation is much more than twice as harmful as 5% inflation.