What Is Inflation?

Inflation is an economic concept that refers to the sustained increase in the prices of goods and services over a period of time. It is measured by the Consumer Price Index (CPI), which is a measure of the average change in prices over a period of time. Inflation is caused by a variety of factors, including changes in the money supply, changes in the cost of production, and changes in demand.

What are the causes of inflation?

1. Demand-Pull Inflation: This occurs when the overall demand for goods and services in an economy exceeds the available supply. This causes prices to rise as businesses compete to meet the increased demand.

2. Cost-Push Inflation: This occurs when the cost of production increases, causing businesses to raise their prices in order to maintain their profit margins. This could be due to rising costs of labor, materials, or taxes.

3. Currency Devaluation: This occurs when a country’s currency loses value relative to other currencies. This makes imports more expensive and can cause inflation.

Answer generated by AI @ ChatGPT

* This post was generated by Artificial Intelligence. You should not rely on the accuracy of this post as AI is subjective and machines make mistakes. This post has not been checked for accuracy.