Why is a bit of inflation good for the economy?

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You can see from the chart below that Australian’s have been saving more and spending less.  Is this good or bad?

Inflation, if well managed, is good for the economy.  If people believe that prices will remain the same for the immediate future, they would in most cases delay buying.  Even worse if they believe the prices will fall, they would rather save than spend now and wait for the fall to occur.  If on the other hand, they believe the ...

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