Inflation is a rise in the general level of prices of goods and services in an economy over a period of time. The effect of inflation on savers and investors is that they lose purchasing power. The net effect of inflation is that it serves to transfer money from savers and investors to debtors. Since inflation affects manufactures in terms of prices of raw materials and so, this is from one side, and facing a low purchasing power is also a great loss. According to all these facts, I would say yes, there would be a tendency to lower outputs. Lower output