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Macroeconomics: Theory and Policy by Vanita Agarwal

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19

Inflation

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 ...

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