Effective economic demand requires not merely need but also corresponding purchasing power.
Purchasing power can be defined as the quantity or numbers of goods or product that consumer can buy or purchase with the currency they have.
Inflation which is the rise in the price of goods and service can tend to affect purchasing power based on the fact that when their is increase in the prices of goods and service the amount of goods a person will buy will decrease.
Therefore Effective economic demand requires not merely need but also corresponding purchasing power.
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