Overview
Inflation dynamics are crucial for understanding how prices change in an economy and the factors that influence these changes. It encompasses various types of inflation, such as demand-pull and cost-push, each with distinct causes and effects. Policymakers must analyze these dynamics to implement ef...
Key Terms
Example: If the inflation rate is 3%, prices have increased by 3% compared to last year.
Example: Lowering interest rates to stimulate economic growth.
Example: A surge in consumer spending during a booming economy can lead to demand-pull inflation.
Example: Rising oil prices can lead to higher transportation costs, causing cost-push inflation.
Example: CPI is used to assess price changes associated with the cost of living.
Example: Zimbabwe experienced hyperinflation in the late 2000s, with prices doubling every few days.