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Science Reviewer On Biological Structures

Inflation is the sustained increase in the general price level of goods and services, leading to a decrease in currency value. It can be caused by demand-pull, cost-push, and built-in factors, and is typically measured by the Consumer Price Index (CPI) or Producer Price Index (PPI). While mild inflation can stimulate economic growth, high inflation can erode savings and lead to economic instability.

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20 views2 pages

Science Reviewer On Biological Structures

Inflation is the sustained increase in the general price level of goods and services, leading to a decrease in currency value. It can be caused by demand-pull, cost-push, and built-in factors, and is typically measured by the Consumer Price Index (CPI) or Producer Price Index (PPI). While mild inflation can stimulate economic growth, high inflation can erode savings and lead to economic instability.

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4.

Inflation
Introduction
Inflation is the sustained increase in the general price level of goods and services in an
economy over time. When inflation rises, every unit of currency buys fewer goods and services
—aka your money loses value. While small inflation is normal and even healthy for economic
growth, runaway inflation (or deflation) can throw an entire economy into chaos.

Causes of Inflation
1. Demand-Pull Inflation – Too much money chasing too few goods. When demand
outpaces supply, prices rise.

2. Cost-Push Inflation – Rising production costs (like wages or raw materials) push prices
up.

3. Built-In Inflation – When workers demand higher wages to keep up with living costs,
which increases costs for producers, creating a feedback loop.

Measuring Inflation
● Usually measured by the Consumer Price Index (CPI) or Producer Price Index (PPI).

● Central banks (like the Fed) typically target 2% annual inflation as a sign of a healthy,
growing economy.

Consequences
● Mild inflation encourages spending and investment.

● High inflation erodes savings and wages, and causes uncertainty.

● Hyperinflation (e.g., Zimbabwe, Venezuela) leads to economic collapse.

Importance
● Inflation affects everything: wages, savings, investments, government policies. Central
banks adjust interest rates to control it, and understanding it is essential to managing
both macroeconomics and your own wallet.

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