The simple definition of inflation is the sustained upward movement in the overall price level of goods and services in the economy. It has the effect of devaluing a particular currency. Inflation is an economic term that refers to an environment of generally rising prices of goods and services within a particular economy. As general prices rise, the purchasing power of consumers decreases. ... For example, prices for many consumer goods are double that of 20 years ago.
Inflation is a measure of the rate of rising prices of goods and services in an economy. Inflation can occur when prices rise due to increases in production costs, such as raw materials and wages. A surge in demand for products and services can cause inflation as consumers are willing to pay more for the product. Inflation is viewed as a positive when it helps boost consumer demand and consumption, driving economic growth. Some believe inflation is meant to keep deflation in check, while others think inflation is a drag on the economy.
Inflation allows borrowers to pay lenders back with money that is worth less than it was when it was originally borrowed, which benefits borrowers. When inflation causes higher prices, the demand for credit increases, which benefits lenders.
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