Introduction to Inflation
Inflation is defined as the increase in the general level of prices of goods and services from one period to another (generally one year).
It is measured in terms of percent change in the value of price index consisting of a basket of goods of services.
An inflation rate of 10% means that the general level of prices of goods and services has increased by 10% over the previous period.
In other words purchasing the same amount of goods and services will cost you 10% more than what it would have cost you in the previous period.
Hence Inflation can also be described as a decline in the real value of money- a loss of purchasing power in the medium of exchange which is also the monetary unit of account.
Inflation is defined as the increase in the general level of prices of goods and services from one period to another (generally one year).
It is measured in terms of percent change in the value of price index consisting of a basket of goods of services.
An inflation rate of 10% means that the general level of prices of goods and services has increased by 10% over the previous period.
In other words purchasing the same amount of goods and services will cost you 10% more than what it would have cost you in the previous period.
Hence Inflation can also be described as a decline in the real value of money- a loss of purchasing power in the medium of exchange which is also the monetary unit of account.
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