While we learned in macroeconomics (or you will learn when you take macroeconomics class), inflation can only be influenced by the actions of the Central Bank (in the US, that is the Federal Reserve).Inflation in-and-of-itself is not a bad thing; however, a high rate of inflation has many negative impacts on the economy.While we do not get into these negative impacts, the part we discuss is in relation to the fact that inflation will 'eat away' or decrease the value of a dollar in the future.So, if your investment earns 4% per year but inflation is 5% over the last year, then your investment did not keep up with inflation and you lost purchasing power.So inflation needs to be considered when making investment decisions.Next week, we will discuss the Internal Rate of Return and how it can help a company make sound financial decisions.

WHAT'S YOUR OPINION ON THE ABOVE STAEMENT.