Articles


Inflation it

The inflation Reasons

Rates of inflation

Inflation Types

Inflation Consequences

The Monetary depreciation

Inflation of costs

Open inflation

The Runaway inflation

Struggle against inflation

Inflation in Russia

Inflation in the USA

Inflation in Ukraine

Inflation in Zimbabwe


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Concept Inflation

In economy, concept inflation, is defined growth of an overall price level of the goods and services for the certain period of time. At overall price level growth, each monetary unit of currency is capable to purchase less goods and services. Thus, inflation is reduction of buying power of money, loss of a part of their effective cost, a medium of exchange and a unit of account in economy. Main an inflation measure is its level (rate) in an annual basis - percentage change of the general price index (as a rule, a consumer price index) during time period.

Inflation

Influence of inflation on a national economy can be both positive, and negative. Negative consequences of inflation switch on: decrease in an effective cost of money and other monetary articles with the course of time, uncertainty concerning the future inflation which can prevent investments and savings, at high rates of inflation can arise shortage of the goods, and consumers start to spend the accumulation from fear that the prices will increase in the future. Positive effects include: maintenance to possibility central banks to control nominal interest rates (intended for droop softening) and encouragement of investments in not monetary capital designs.

High rates of inflation and a hyperinflation are called by an excessive monetary growth. Low or moderate inflation can be connected with fluctuations of real demand for the goods and services, or change of available stocks, for example, during deficiency, and also with a small monetary growth.

For today the majority of economists is supported by low, stable rates of inflation. Low (in comparison with zero or negative) inflation reduces weight of an economic recession, allowing a labour market to react more fast in crisis, and also reduces risk of that the liquidity trap will prevent a monetary policy in economy stabilisation. The problem of preservation of low and stable rates of inflation, as a rule, is executed by the monetary authorities. More often, it is central banks which supervise a monetary policy by an establishment of interest rates, through open market operations, and also by creation of bank reserve requests.

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