Why is high inflation bad for the economy?

Question

Why is high inflation bad for the economy?

Answer 1

High inflation evidences variation in value of an item or group of items for exchange.  The sale price is excessive in comparison to the cost of production.

Answer 2

It makes sound financial decisions difficult (hard to decide if it is a good idea to say build a new factory when inflation makes it difficult to determine the return on the investment), it also reduces foreign investment in a country, since companies from outside the nation will have the same problem. The lower investment means slower economic growth.

Answer 3

There are both positive and negative aspects to inflation.

High Inflation makes it more costly to maintain your current standard of living. Prices increase, but income stays the same. During an economic recession inflation is especially bad because unemployment is usually higher and prices are increasing making it much harder for families to make ends meet.

Answer 4

because your paycheck doesn't increase -= just the price of things...  How would you like to pay 20.00 for a soda from the machine?  but still be making the same money?  

Answer 5

When people don't trust the value of their money.  Then they can't trust their economic system either.  Because it is based on the use of money.  And when people don't trust their economic system.  Then they don't participate in it as much as they can.  Which often leads to an economic decline.