Central bank inflation targets have typically been between 2% and 3% per year but the recent trend by governments to take on large amounts of debt to support individuals and companies during the pandemic has had countries borrowing huge amounts. There is some discussion that by allowing inflation to occur, countries will be able to pay back debt with much cheaper currency in the future.

1. What actions would be prudent by a business that was facing future high levels of inflation? Ensure you include a discussion about investment and financing decisions. What type of borrowing would be preferred and why? Do you think high inflation is reasonable/expected?