2(Inflation) (2.1)

Inflation

Inflation

The general and sustained rise in the price level of goods and services in an economy over a period of time.

Deflation

The general fall in the price level of goods and services in an economy over a period of time.

Cost push inflation

Results from an increase in the cost of production for businesses, causing them to push the cost onto the consumer when supply exceeds demand.

Demand pull inflation

Occurs when the aggregate demand for goods and services exceeds the aggregate supply, leading to high prices.

Fall in demand

A decrease in the overall demand for goods and services, often seen during a recession.

Monetary inflation

When a central bank prints excessive money not supported by growth in the economy, leading to a decrease in the value of existing money and driving up prices.

CPI formula

(new-old)/old*100