what exactly is inflation?

Question

meaning with example

Answer 1

Inflation is a rise in the general level of prices, as measured against some baseline of purchasing power. The prevailing view in mainstream economics is that inflation is caused by the interaction of the supply of money with output and interest rates. In general mainstream economists divide into two camps: those who believe that monetary effects dominate all others in setting the rate of inflation, or broadly speaking, monetarists, and those who believe that the interaction of money, interest and output dominate over other effects, or broadly speaking Keynesians.


Ex: Increase in Cola pricing as set against the Consumer Price Index (CPI).

Answer 2

inflation is a rise in the general level of prices, as measured against some baseline of purchasing power. The prevailing view in mainstream economics is that inflation is caused by the interaction of the supply of money with output and interest rates. In general mainstream economists divide into two camps: those who believe that monetary effects dominate all others in setting the rate of inflation, or broadly speaking, monetarists, and those who believe that the interaction of money, interest and output dominate over other effects, or broadly speaking Keynesians. Related terms include deflation which is a falling general level of prices, disinflation which is the reduction of the rate of inflation, hyper-inflation which is an out of control inflationary spiral and reflation which is an attempt to raise prices to counter act deflationary pressures.

Answer 3

In mainstream economics, inflation is a rise in the general level of prices, as measured against some baseline of purchasing power. The prevailing view in mainstream economics is that inflation is caused by the interaction of the supply of money with output and interest rates.
Imagine when you have money but the coffee to buy. The value of coffee against the dollar will be decided by how much you have, how much coffee you want, how many others want the same coffee, and how much coffee is available, among others.

Answer 4

inflation is a rise in the general level of prices, as measured against some baseline of purchasing power. The prevailing view in mainstream economics is that inflation is caused by the interaction of the supply of money with output and interest rates.

eg :for eg the price of car rises by 10% due to supply conditions

Answer 5

Inflation is a condition which exist in an economy at the time when the aggregate demand level in the economy is higher than the aggregate (full employment level) supply. at this level the general price level in the economy tends to increase.

say suppose the agg supply of a commodity x is 150000 cr. units but people are demanding 250000 cr units then the price will rise and this situation will termed as inflation.

we can also explain this with the help of curves, if you want that i can give you in next answer

all the best

Answer 6

To be simple,when you have only a small quantity of a commodity in the market and many takers with more than enough money they vie with each other, then the cost of the commodity goes up.
when the buying power is more and the demand is more than the supply it results in inflation.

Answer 7

Inflation, in economics, persistent and relatively large increase in the general price level of goods and services. Its opposite is deflation, a process of generally declining prices. The U.S. Bureau of Labor Statistics produces the Consumer Price Index (CPI) yearly, which measures average price changes in relation to prices in an arbitrarily selected base year. While the CPI is usually considered the most reliable estimate of inflation, some economists have questioned whether it overstates inflationary trends.
Inflation results from an increase in the amount of circulating currency beyond the needs of trade; an oversupply of currency is created, and, in accordance with the law of supply and demand, the value of money decreases. Deflation is brought about by the opposite condition. In the past, inflation was often due to a large influx of bullion, such as took place in Europe after the discovery of America and at the end of the 19th cent. when new supplies of gold were found and exploited in South Africa. In modern times wars are the most common cause of inflation, as government borrowing, the increase in the money supply, and a diminished supply of consumer goods increase demand relative to supply and thereby cause rising prices.

Inflation stimulates business and helps wages to rise, but the increase in wages usually fails to match the increase in prices; hence, real wages diminish. Stockholders make gains—often illusory—from increased business profits, but bondholders lose because their fixed percentage return has less buying power. Borrowers also gain from inflation, since the future value of money is reduced. Deflation, which historically has occurred in the downward movement of the business cycle, lowers prices and increases unemployment through the depression of business. Persistent deflation in Japan, beginning in the early 1990s, has resulted in a drop in consumption, record unemployment, and general economic stagnation. An unusually steep and sudden rise in prices, sometimes called hyperinflation, may result in the eventual breakdown of an entire nation's monetary system. The most notable example is Germany (1923), where prices rose 2,500% in one month.

In the United States, annual price increases of less than about 2% or 3% are not considered indicative of serious inflation. During the early 1970s, however, prices rose by considerably higher percentages, leading President Nixon to implement wage-and-price controls in 1971. Stagflation–the combination of high unemployment and economic stagnation with inflation–became common in the industrialized countries during the 1970s. The costs of the Vietnam War and the social programs of the Johnson administration, plus the oil prices increases in 1974 by the Organization of Petroleum Exporting Countries (OPEC), contributed to U.S. inflation. By the end of the 1970s the Federal Reserve raised interest rates in an attempt to reduce inflation. Following a recession in the early 1980s, there was renewed growth, somewhat lower interest rates, and a decrease in the inflation rate.

During the early 1990s, a downward business turn created an international recession—without significant deflation—that replaced inflation as a major problem; the Federal Reserve lowered interest rates to stimulate economic growth. The mid-1990s saw moderate inflation (2.5%–3.1% annually), even with an increase in interest rates. By the late 1990s, U.S. inflation was low (1.9% by 1998), despite record growth, but by 2006 inflation had risen to above 4%, due largely to increases in energy costs and, to a lesser degree, to large government deficits.

Answer 8

When something is inflated it grows bigger (or appears to!) If you blow up a balloon that's inflation.

Answer 9

It is when you inflate something - ie blow it up. For example, a balloon, a lilo, a rubber sex doll.

Answer 10

i dont know