6 Facts About Inflation

What is Inflation?

The general rise in prices; products becoming more expensive, Most central banks shoot to limit inflation. Inflation is the rate of which prices fluctuate up and down for goods and services. When inflation rises the power of our purchasing power as a society decreases. The more money government prints and puts into circulation lessens the value of our currency. To keep the economy sailing smoothly the central banks and government try to keep a close eye on inflation and deflation.

Facts about inflation

1. When inflation rises, our purchasing power reduces. - When prices go up on any type of good or service we can purchase, the power of the society purchasing power like the want to buy goods or services is no longer as popular as it used to be when the dollar value was higher.

2. If a society starts to purchase less goods or services due to reduction in purchases some business may get/ be shut down.- So when we stop purchasing the goods in services as much as we did as a society when we could afford it, it causes businesses to lose customer productivity. Businesses have to have an on going gain of currency to keep their business going.

3. If there is more money in circulation the demands could rise for certain goods or services which will result in prices going up.- Central banks and governments put more money in circulation in hope of creating more jobs and more money to put into the society. But when banks and the government do this it lessens the value of the currency already in circulation.

4. If prices increase it can cause us as a society to lose purchasing power- When businesses raise the prices us as a society get less motivated to buy the goods or services and the businesses lose money and business due to the inflation. When this occurs it throws off the income, and output of money.

5. 774 inflation is usually the annual price change for the levels of goods and services on a steady basis.

6. The rate of inflation is one of the most important indicators economically when inflations values changes currency.

7.Inflation is caused by supply and demand- Us as a society give off the rates of supply and demand, if everything is going steady in the economy, more people are willing to demand a good or service allowing the businesses to supply the society with our wants or needs, when we can afford them,