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Inflation

AnalyticsTrade Team
AnalyticsTrade Team Last updated on 26 Apr 2023

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Inflation

Inflation is an economic concept that refers to the sustained increase in the general price level of goods and services in an economy over a period of time. It is measured as an annual percentage increase. When the inflation rate is high, each unit of currency buys fewer goods and services. As a result, inflation erodes the purchasing power of money. Inflation is caused by a variety of factors, including changes in the money supply, changes in the cost of production, and changes in the demand for goods and services.

History of Inflation

Inflation has been a part of economic life since ancient times. The Roman Empire experienced periods of high inflation, and the term โ€œinflationโ€ was first used in the 16th century. In the 18th century, economists began to study inflation in more detail, and in the 19th century, the concept of inflation was formalized. In the 20th century, economists developed models to explain the causes and effects of inflation.

In the modern era, inflation is closely monitored by central banks and governments. Central banks use monetary policy to control inflation, and governments use fiscal policy to manage the economy. Inflation is an important factor in economic growth, and it can have a significant impact on the value of investments.

Table of Comparisons

Year Inflation Rate (%)
2020 1.3
2019 2.3
2018 2.4
2017 2.1
2016 1.3

Summary

Inflation is an economic concept that refers to the sustained increase in the general price level of goods and services in an economy over a period of time. It is caused by a variety of factors, including changes in the money supply, changes in the cost of production, and changes in the demand for goods and services. Inflation is closely monitored by central banks and governments, and it can have a significant impact on the value of investments. For more information about inflation, visit the websites of the Federal Reserve, the World Bank, and the International Monetary Fund.

See Also

  • Deflation
  • Monetary Policy
  • Fiscal Policy
  • Interest Rates
  • Exchange Rates
  • Gross Domestic Product (GDP)
  • Consumer Price Index (CPI)
  • Producer Price Index (PPI)
  • Cost of Living Index (COLI)
  • Purchasing Power Parity (PPP)

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