Inflation is a constant boost in the general price level in any economy. The financial protocols and policies defined by government are completely responsible for it. Inflation means that money cannot buy as much today as it could have bought earlier. The reason however is clear that inflation is caused by excessive printing of money.
Levels of Inflation
Inflation has different levels that tend to hit the economy of a country or state. There are levels that can be controlled easily by implementing some strategies to counter the effects. But there is a level which can severely distort a nation’s economy.
The most commonly known type of inflation among the economists of America is wage inflation or more specifically, demand-pull inflation. The employees watch the creeping costs and claim settlement in the form of higher salaries and wages, which in turn creates chaos between inflation and income claim (Au, 2007).
An uncommon level of inflation is the product inflation, also identified as cost-push inflation. It can be observed today that articles of trade are tagged with higher prices like energy and metal. Food & energy price modifications are not counted as core inflation because of their volatile pricing from time to time.
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