Inflation.
Meaning of Inflation. Inflation is the rate at which the general level of prices for goods and services rises over time, resulting in a decrease in the purchasing power of money. In other words, as inflation increases, each unit of currency buys fewer goods and services. Key Aspects of Inflation: 1. ** Measurement **: Inflation is typically measured using price indices, such as the Consumer Price Index (CPI) or the Producer Price Index (PPI). These indices track changes in the prices of a basket of goods and services over time. 2. ** Causes **: - ** Demand-Pull Inflation **: Occurs when the demand for goods and services exceeds their supply, driving prices up. - ** Cost-Push Inflation **: Results from an increase in the costs of production, such as wages and raw materials, which producers pass on to consumers in the form of higher prices. - ** Built-In Inflation **: Also known as wage-price inflation, it happens when businesses in...