what is inflation?

Answer 1

Hey Sexy!!!!

Here's your answer:

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. 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. Other theories, such as those of the Austrian school of economics, believe that an inflation of the general price level and of specific prices is a result from an increase in the supply of money by central banking authorities.

Related terms include: deflation, a general falling level of prices, disinflation, the reduction of the rate of inflation, hyper-inflation, an out of control inflationary spiral, stagflation, a combination of inflation and poor economic growth, and reflation, which is an attempt to raise prices to counteract deflationary pressures

Answer 2

Inflation is defined as the change in the level of prices. Most of the time, people mean the "Consumer Price Index" or "CPI" when they discuss inflation in a country. This is the change in the price "shopping basket" of consumer goods for a country that the national statistics agency has sampled over time on a monthly basis. The "core CPI" is the change in prices without the food and energy components, or "ex food and energy". Since food and energy prices are volatile, the "core CPI" is thought to be a more accurate measure of underlying inflation.

Answer 3

yea wikipedia says what kosmoisth says..errr..actually kosmoisth says what wikipedia says.

Yea inflation is the rise in prices while your purchasin power remains the same. In other words and simply, your dad's salary remains the same but the stuff u buy becomes more expensive. So your money loses its value, and it is called inflation. There are many reasons of inflation.

It is mainly affected by interest rates
Another reason is increase in the supply of money by central bank.That is if the central bank suplies more money to the market, inflation occurs.My country suffered a lot due to this reason in the past

Answer 4

mi_4252 is spot on with the technical explanation. In general terms you can think of inflation as the cost of money.

Like everything else, the value of a moneyis determined by supply and demand. As people borrow money from banks, "new money" is created into the system, since banks don't actually have to have all the money they lend out. For every $100 a bank lends out, it only has to have $4. Banks can do this because they bet that only a few of their customers will actually ever be using the money at the same time, so inbetween they can shift the money from one account to the next. This is why "bank-runs" are so dangerous. If everybody tries and withdraws money from a bank at the same time, it can't cover it's debts to its customers.

So anyway, as more money enters circulation due to borrowing, the supply of money increases. Consequently the demand drops, and things cost more. So people borrow even more to cover the new cost of things, and you have a vicious circle.

Answer 5

Putting it in as simple terms as possible, inflation is the decreasing purchasing power of money. For example, if you could have bought a car for $5000 last year, and the very same car costs $6000 this year, that's inflation.

Answer 6

In mainstream economics, inflation is a rise in the general level of prices, as measured against some baseline of purchasing power.

Answer 7

First we ought to understand inflation. there are various distinctive definitions and theories of ideas from the worldwide of economists on what inflation potential. besides the undeniable fact that the guy on the line knows that for the period of actuality there is too lots foreign places money floating around interior the device inflicting a devaluation of the dollar and greatest to greater fees. regrettably unions often cases combat for greater wages because of the fact of increasing fees besides the undeniable fact that this purely added will strengthen inflation because of the fact fees proceed to upward thrust. the main significant element the government can do to cut back inflation is to decrease the provision of money interior the device. The attitude will comprise: cost regulation - regulating fees so that they fall interior a band the place the business enterprise proprietors ought to make a income yet yet not take income of the situation rules on commercial financial lending establishments - strengthen the subject for figuring out to purchase a loan by using increasing the charges of interest and insisting on better securities for loans. Making it harder to get a loan facilitates to decrease the bypass of money interior the device Incentives for saving - Monies in fastened deposits are monies that not freely bypass interior the device and could coach effective to the top shoppers fantastically as quickly as the financial device stabilizes as quickly as greater. those are the countless methods the government might use to hold returned the financial device and there are some greater state-of-the-paintings innovations as referenced by using the countless different answerers. besides the undeniable fact that those curiously trouble-free innovations inspite of the incontrovertible fact that very effectual require very lots of cooperation between the government and the corporate worldwide for the better solid of not purely the poor guy however the country on an entire.

Answer 8

Inflation is caused by the interaction of the supply of money with output and interest rates.

Answer 9

A measure of the cost of things. Typically found by taking a set of everyday household goods and comparing the overall price now with the price before to see the increase.

Answer 10

That uncomfortable feeling in the gut when you have eaten too much. Or the size of you ego when you look in the mirror and tell yourself how beautiful you look.