Quick Definition

Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power.

Examples

• 1When inflation is high, the cost of living increases as prices for everyday items like groceries and gas go up.
• 2During periods of inflation, the real value of money decreases, meaning you can buy less with the same amount of money than you could previously.
• 3Inflation can lead to higher interest rates as central banks may increase rates to control economic overheating.
• 4Businesses may raise prices to keep up with increased costs of production due to inflation, affecting consumer spending.

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