Inflationary Psychology

Posted in Finance, Accounting and Economics Terms, Total Reads: 578

Definition: Inflationary Psychology

The inflationary psychology is a state of mind wherein due to the psychic behaviour of a person, he is forced to spend more cash for his daily expenses.

This is due to his thinking that there may be inflation in the future thereby leading to more and more spending by the individual, thus leading to an increase in currency in circulation as well as an increase in the velocity of money.

Inflationary Psychology maybe at times disastrous to the economy as a whole as this results in an increase in spendings and leads to bringing down the economy by further increasing the inflation.

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