3. What are the causes of inflation? How is inflation measured?

Inflation. What is Inflation?
PLAN:
1.Inflation.
2.How is inflation measured?

3.What are the causes of inflation?

4.How is inflation measured?

Inflation What is Inflation?


Inflation is a rise in prices, which can be translated as the decline of purchasing power over time. The rate at which purchasing power drops can be reflected in the average price increase of a basket of selected goods and services over some period of time. The rise in prices, which is often expressed as a percentage, means that a unit of currency effectively buys less than it did in prior periods. Inflation can be contrasted with deflation, which occurs when prices decline and purchasing power increases.
KEY TAKEAWAYS

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  Inflation is the rate at which prices for goods and services rise.
  
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  Inflation is sometimes classified into three types: demand-pull inflation, cost-push inflation, and built-in inflation.
  
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  The most commonly used inflation indexes are the Consumer Price Index and the Wholesale Price Index.
  
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  Inflation can be viewed positively or negatively depending on the individual viewpoint and rate of change.
  
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  Those with tangible assets, like property or stocked commodities, may like to see some inflation as that raises the value of their assets.
  
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  Inflation is the index of general growth of prices for goods and services. When prices grow, a unit of the national currency can buy fewer goods and services. Hence, inflation facilitates a decrease in the purchasing power of money. The opposite of inflation is deflation, which is a stable decline of the prices for goods and services.
  
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  In other words, inflation is the speed (expressed in pecent) of the growth of general price levels for goods and services. Inflation levels demonstrate how high prices have grown in the country over a certain timeframe. Inflation leads to an increase in the prices for various assets over time. The higher reaches inflation, the more prices grow.