- Inflation is the rise of the general prices of an economy in a period caused by money supply growth.
- Note that the general prices may increase, but the cause may not be by money supply growth, but for supply and demand changes, for example.
- If the inflation is positive, the general prices increases and each unit of the currency buy a few products and services.
- The opposite of inflation is deflation.
- The general prices of products and services decrease.
- Long period of sustained inflation is correlated with money supply growing rate higher than the economic growth rate.
What is better: high or low inflation?
What are the second-order effects of high inflation? And a deflation?
Why inflation increases when the money supply growing rate is higher than the economic growth rate?