Final answer:
The term 'inflation reflexes' is not a recognized economic term. Instead, the response provides an overview of the definition, causes, and consequences of inflation, as well as the challenges it poses to economic policy and people's purchasing power. It also explains the redistribution effect of inflation and gives a historical example of hyperinflation in the Weimar Republic.
Step-by-step explanation:
The question 'How are inflation reflexes triggered? What does it help prevent?' seems to be based on a misunderstanding, as 'inflation reflexes' is not a recognized economic term. Instead, we'll address the broader topic of inflation in economics.
Definition and Measurement of Inflation
Inflation is the increase in the general price level of goods and services in an economy over a period. It is measured by the inflation rate, which is the percentage change in the price index, typically the Consumer Price Index (CPI), over a specific period.
Consequences of Inflation
Inflation can lead to redistributions of purchasing power, which can be detrimental to lenders because the money they get back has less purchasing ability. Fixed income individuals such as retirees may see their living standards decline if their income does not keep up with inflation.
Economic Impact of Inflation
Inflation can obscure actual supply and demand changes, making it hard for businesses to plan for the future. However, a moderate amount of inflation can be beneficial, as it may encourage spending and investment, preventing economic stagnation.
Hyperinflation
A historical example of hyperinflation occurred in the Weimar Republic (Germany) in the early 1920s, where prices rose on an hourly basis, wiping out savings and causing economic chaos.
Causes and Policy Discussions
Possible causes of inflation include an increase in money supply, demand-pull factors, or cost-push factors. Government policies to deal with inflation usually involve monetary controls, such as adjusting interest rates.