After studying this topic, you should be able to understand
- Inflation leads to a decrease in the purchasing power of money.
- The two ways in which inflation can be measured are through a change in the Price Index and the Gross National Product Deflator.
- In the real economy since all prices do not change proportionately, some members of the society gain from inflation while others may loose.
- A household’s wealth depends on the difference between the value of its assets and debts.
- It has been observed in various countries that there exists a positive relationship between inflation and economic growth.
- Perfectly anticipated inflation exists when the rate of inflation is steady and perfectly predictable.
- Imperfectly anticipated inflation ...