Inflation

Why is unexpected inflation a societal problem?

This is a societal problem because people will not be able to prepare for inflation and adjust the prices to loans and trades. For example, if you borrow 100 dollars from the bank, and then next year when you come back to pay the 100 dollars there is a 10 percent increase in inflation, the bank is actually losing money. In inflation, there is more money being produced, which lowers the real value of the dollar. In this case the bank would lose 10 dollars because the real value of the dollar has gone down 10 percent. This causes a lot of problems for the society because there would be disputes between people who borrow money and banks who lend the money. If inflation just rises simultaneously then it skews the prices of goods and the value of the dollar.

GDP

What does real GDP growth mean for you and me?

GDP is growth is the amount of revenue a country makes based on the production and consumption of goods. It is important to understand that the GDP growth can grow through the degradation of the environment  so in some cases when GDP goes up it does not necessarily mean that your life is better. A growth in GDP makes people more confident in the government, but it does not show the feelings that they have for their overall wealth. It is important to understand that GDP does not take into consideration the unemployment rate, the size of the government, or the feeling that people have towards their life, rather it helps us understand how efficient and productive our economy is.