Inflation / Deflation
General rise (inflation) or fall (deflation) in price levels, impacting economic policy.
Detailed Description
Inflation / Deflation
What is inflation?
Inflation is the general increase in prices and the decrease in the purchasing power of money, typically measured as an annual percentage change.
What causes inflation?
Inflation can be caused by demand-pull factors, where demand exceeds supply, or cost-push factors, where production costs increase.
How does deflation affect the economy?
Deflation can lead to decreased demand for goods and services, resulting in lower prices and increased purchasing power, but it may also harm economic growth.
What are the main indices used to measure inflation?
The main indices used to measure inflation are the Consumer Price Index (CPI) and the Producer Price Index (PPI).
What strategies can be used to mitigate inflation?
Strategies to mitigate inflation include tightening monetary supply, increasing interest rates, and implementing fiscal measures to control spending.