Definition of Inflation - Economics Help - Deepstash
Definition of Inflation - Economics Help

Definition of Inflation - Economics Help

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Definition of Inflation - Economics Help

  • Inflation is a situation of rising prices in the economy.
  • Inflation is a sustained increase in the general price level in an economy. Inflation means an increase in the cost of living as the price of goods and services rise.
  • The rate of inflation measures the annual percentage change in the general price level.

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  • Inflation leads to a decline in the value of money. “Inflation means that your money won’t buy as much today as you could yesterday.”
  • If the prices of goods rise. the same amount of money will purchase a smaller quantity of goods.

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  • Cost-push inflation – when a rise in prices is caused by a rise in the cost of production, such as higher oil prices
  • Demand-pull inflation – when a rise in prices is caused by rising aggregate demand and firms pushing up prices due to the shortage of goods

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Hyperinflation is generally considered to occur when inflation is greater than 1000%. 

With hyperinflation, money loses its value so rapidly that nobody wants to use it as a medium of exchange.

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