The Pros And Cons Of Inflation

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Basically, inflation is a sustained increase in the general level of prices for goods and services or an increase in the money supply. It cannot be measured by an increase in the cost of one product or service, or even several products or services. However, it is measured through increase annual percentage. Generally, when inflation rises, the price of goods will decrease. Also, as inflation rises, the value of a dollar does not stay constant. The value of a dollar is observed in terms of purchasing power, which is it real, tangible goods that money can buy. Thus, there is a decline in the purchasing power of money when inflation arises. Inflation can mean either an increase in the money supply or an increase in price levels. Commonly, when hear about inflation, it is about a rise in prices compared to some benchmark. To measure the inflation, there are two ways which either through increased money supply or increased Consumer Price Index. Consumer Price Index (CPI) is the standard measure of inflation used in the US financial markets and core CPI not include food and energy from the formula for these goods showed price volatility over the remaining CPI.…show more content…
Inflation rate is measured as the percentage change in the price index. It has been identified that the impact of inflation on interest rate as a channel through which it affects the stock market and ultimately economic growth (Gerolamo, 2001). Inflation happens when the price of most goods and services continues to rise upward. It is measured by the consumer price index (CPI) (Qaiser, Salman, Ali, Hafiz, and Muhammad,

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