Abdullayev ulug’bek inflation plan

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ABDULLAYEV ULUG’BEK 

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INFLATION 
PLAN: 
1. WHAT IS INFLATION
2. TERMINOLOGY
3. INFLATION HISTORY

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In economics, inflation is an increase in the general price level of goods and 
services in an economy.
[3][4][5][6]
 When the general price level rises, each unit 
of currency buys fewer goods and services; consequently, inflation corresponds to a 
reduction in the purchasing power of money.
[7][8]
 The opposite of inflation 
is deflation, a decrease in the general price level of goods and services. The common 
measure of inflation is the inflation rate, the annualized percentage change in a 
general price index.
[9]
 As prices faced by households do not all increase at the same 
rate, the consumer price index (CPI) is often used for this purpose. The employment 
cost index is also used for wages in the United States. 
There is disagreement among economists as to the causes of inflation. Low or 
moderate inflation is widely attributed to fluctuations in real demand for goods and 
services or changes in available supplies such as during scarcities.
[10]
 Moderate 
inflation affects economies in both positive and negative ways. The negative effects 
would include an increase in the opportunity cost of holding money, uncertainty 
over future inflation, which may discourage investment and savings, and if inflation 
were rapid enough, shortages of goods as consumers begin hoarding out of concern 
that 
prices 
will 
increase 
in 
the 
future. 
Positive 
effects 
include 
reducing unemployment due to nominal wage rigidity,
[11]
 allowing the central bank 
greater freedom in carrying out monetary policy, encouraging loans and investment 
instead of money hoarding, and avoiding the inefficiencies associated with deflation. 
Today, most
[weasel words]
economists favour a low and steady rate of inflation.
[12]
 Low 
(as opposed to zero or negative) inflation reduces the probability of 
economic recessions by enabling the labor market to adjust more quickly in a 
downturn and reduces the risk that a liquidity trap prevents monetary policy from 
stabilizing the economy, while avoiding the costs associated with high 
inflation.
[13]
 The task of keeping the rate of inflation low and stable is usually given 
to monetary authorities. Generally, these monetary authorities are the central 
banks that control monetary policy through the setting of interest rates, by carrying 
out open market operations and (more rarely) changing commercial bank reserve 
requirements 

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The term originates from the Latin inflare (to blow into or inflate) and was initially 
used in America in 1838 with regard to inflating the currency.
[15]
 The term was used 
"not in reference to something that happens to prices, but as something that happens 
to a paper currency".
[16]
 The resulting imbalance between the quantity of money and 
the amount needed for trade caused prices to increase. Over time, the 
term inflation has evolved to refer to increases in the price level; an increase in the 
money supply may be called monetary inflation to distinguish it from rising prices, 
which for clarity may be called "price inflation".
[16]
 
Conceptually, inflation refers to the general trend of prices, not changes in any 
specific price. For example, if people choose to buy more cucumbers than tomatoes, 
cucumbers consequently become more expensive and tomatoes cheaper. These 
changes are not related to inflation; they reflect a shift in tastes. Inflation is related 
to the value of currency itself. When currency was linked with gold, if new gold 
deposits were found, the price of gold and the value of currency would fall, and 
consequently, prices of all other goods would become higher 
By the nineteenth century, economists categorised three separate factors that cause 
a rise or fall in the price of goods: a change in the value or production costs of the 
good, a change in the price of money which then was usually a fluctuation in 
the commodity price of the metallic content in the currency, and currency