Hi maxine-ga
After conducting an online research, I have found the following
information on affects of inflation on functions of money.
"Inflation" is defined as an increase in the overall level of prices
over an extended period of time. Or in other words Inflation occurs
when the supply of money far exceeds the supply of goods and services.
The functions of money are to serve as a medium of exchange, a unit of
account, and a store of value. Inflation mainly affects the ability of
money to serve as a store of value, since inflation erodes money's
purchasing power, making it less attractive as a store of value. Money
also isn't as useful as a unit of account when there's inflation,
because stores have to change prices more often and because people are
confused and inconvenienced by the changes in the value of money.
Any inflation affects this function of money and obliges us to make
the distinction between nominal and real prices, for example when
looking at GDP figures. Inflation often makes the financial
performance of companies and investments more difficult to judge. It
is easy to see an increase in nominal profit and judge that to be a
good result whereas, in fact, real profit has declined.
Source:
Inflation and its Effect upon the Functions of Money:
www.anforme.co.uk/pages/images/Inflation%20Article.pdf
Functions of Money & Inflation:
www2.bc.edu/~soffritt/SolPS5.pdf
Causes of Inflation:
http://www.ex.ac.uk/~RDavies/arian/metatheory.html
Inflation and money:
http://www.fte.org/teachers/lessons/efl/efllesson8.htm
The Economic Effects of Money:
http://comp.uark.edu/~muslim/islam/economy.html
Excerpts from "Money - By Milton Friedman":
http://search.eb.com/nobel/macro/5004_32.html
Hope this helps. Feel free to ask for any clarifications, if you have
any, I’ll be more than happy to answer you.
Regards
OnlinExpert-ga |
