Give detail explanation about the inflation, Macroeconomics

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Give detail explanation about the Inflation

  • Price index is computed at a particular point in time, inflation over a time period, mainly one year
  • Inflation may just as well be defined as percentage change in price level.
  • Inflation is independent of which year we use as our base year for our price index.
  • You very often hear that inflation is "percentage change in prices" though keep in mind that "prices" is then short for the price level.
  • Since the price level may be defined in many different ways (using different goods and different weights in basket), inflation may be defined in many different ways.
  • if price index decreases between two points in time we say that inflation is negative or that we have deflation.

 


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