How are gdp and inflation related?

GDP (Gross Domestic Product) and inflation are related in that a growing GDP can lead to an increase in inflation, while a stagnant or decreasing GDP can lead to a decrease in inflation. In general, when the economy is growing and GDP is increasing, there is often more demand for goods and services, which can lead to higher prices (inflation) as businesses raise their prices to keep up with the increased demand. Conversely, when the economy is not growing and GDP is decreasing, there is often less demand for goods and services, which can lead to lower prices (deflation) as businesses lower their prices to attract customers.

The effects of inflation are often not directly felt but are played out over a long time, especially long-term investments are vulnerable to inflation.


At Horizon65, we created a mobile app that enabled you to check the effect of inflation on your savings.

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