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In the recent past, the prices of basic commodities have been on an upward trend party due to the global recession and social unrest in...

      

In the recent past, the prices of basic commodities have been on an upward trend party due to the global recession and social unrest in some oil producing Middle East countries. In relation to the above statement, identify four negative effects of the uncontrollable upward trend in prices of go and services on entrepreneurship.

  

Answers


Martin
The negative effects of the uncontrollable upward trend in prices of goods and services on entrepreneur ship are;

• Investment and long term economic growth is discouraged. This is because of the uncertainty and confusion that is more likely to occur during periods of high prices of goods and services.

• An economy can be rendered noncompetitive. This is particularly important for countries in the Euro-zone because they can‘t devalue to restore competitiveness.

• Reduced value of savings. Increase in prices leads to a fall in the value of money. This makes savers worse off and can lead to a redistribution of income in society.

• Menu costs of changing prices lists. Not so significant with modern technology
marto answered the question on January 30, 2019 at 10:38


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