Question

In Economics in One Lesson, Hazlitt argues that although purchasing power might look like it has increased after a war, these seemingly good economic results are merely the result of ______.

Answer 1

Hazlitt's argument is that the increased purchasing power after a war is not good economic result, but merely the result of inflation.

What is inflation?

Inflation refers to the progressive increase in the prices of basic goods and services in an economy. Inflation causes the general price level to rise.

When this happens, each unit of currency buys fewer goods and services than it could buy in previous periods.

Thus, the result of inflation is a reduction in consumer's purchasing power.

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