Overview
Inflation is a critical economic concept that describes the rise in prices of goods and services over time, which can significantly impact the purchasing power of consumers. Understanding inflation is essential for making informed financial decisions, as it affects everything from savings to wages. ...
Key Terms
Example: If inflation is 2%, a $100 item will cost $102 next year.
Example: If prices rise, purchasing power decreases.
Example: Living in a city with high costs can strain budgets.
Example: CPI is used to assess price changes associated with the cost of living.
Example: If you earn $50,000 this year, that's your nominal income.
Example: If inflation is 3%, your real income may be less than your nominal income.
Related Topics
Monetary Policy
The process by which the central bank manages money supply to influence the economy.
intermediateFiscal Policy
Government spending and tax policies used to influence economic conditions.
intermediateEconomic Growth
An increase in the production of goods and services in an economy over time.
intermediateSupply and Demand
The relationship between the availability of a product and the desire for that product.
beginnerKey Concepts
Purchasing PowerCost of LivingEconomic IndicatorsInflation Rate