ABSTRACT
Money and inflation are interrelated. A rapid increase in money supply and a high inflation rate is a common situation in many countries. A high inflation rate is detrimental to a company since it makes rapid inroads into consumer purchasing power, causes customers to pay late and necessitates regular adjustment of prices and the book value of assets. In primitive economies that are largely dependent on agriculture, fishery, or hunting, the need for money is small. Households produce few products and each household consumes its own production to a large extent. A high level of inflation affects the exchange function of money because it makes the splitting of a transaction into two parts more difficult. The purchasing power of money decreases as inflation increases. Goods also have to be given a value for purposes that have nothing to do with an exchange situation.
