Inflation- It's an increase in average price levels
effect of inflation is to decrease the purchasing power!
There 2 types of inflation-
Demand pull- increase in demand, causes increse in prices. "more dollars chasing fewer goods"
Cost push- Increase cost of production force business to nicrease the price they sell goods and services at.
How is it measured?? Consumer price index. The gov establishes a dollar value, point total of a market baset of goods and services that consumers have purchases recently.
Who is helped by inflation??
- People who owe money
- People who make more money and receive COLAS
- People who can anticipate inflation
Debate on if inflation is good or bad!
read this and it explains pros and cons
video on inflation
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