Can anybody explain me clearly in simple terms what is INFLATION"?

Question

Can anybody explain me clearly in simple terms what is INFLATION"?

Answer 1

Ok, let's look at it this way.  How much was a McDonalds Value meal 10 years ago?  I don't know for sure, but let's say $3.  Now, today, how much do you pay for that same McDonalds value meal?  let's say $5.  

The price of the Value meal has not actually risen.  Just the value of the dollar has actually dropped.  The meal is more expensive becaue of the rising costs of goods and services.  As the cost of supplies goes up, McDonalds has to raise the cost of its meals (over time) to continue to make a profit.  There are other factors as well such as salary increases, costs of shipping etc...  

If you're getting the same meal at a higher price, the value of the dollar must have dropped.  This is simply know as inflation.

Hopefully this is a pretty simple way to understand about inflation.

Answer 2

Inflation = Too Many Dollars Chasing Too Few Goods.

I think that is about as simple as you can make it.

Answer 3

Well... inflations , in  the simplest words, is the concentration of wealth to few monopolists. when there is

1. unemoloyement.

2. trade deficite

3. budget deficit

4. decreasing value of the currency

  then the result is inflation

for example

the consumer price index or the buying capacity of the street man has been decreasing during the world food crisis and the price rises on oil, the largest in history.

this is creating inflation how see

the import bill has risen from 10 to 50 percent in many countries, the prices of almost each and every thing depend on the oil prices, so the inflation increased from 10 to 40 percent .

inflation is the economic variabel that depend on many things  and situations now you can judge on your own

Answer 4

Inflation is a rise in the general level of prices of goods and services over time. "Inflation" is also sometimes used to refer to a rise in the prices of some specific set of goods or services, as in "commodities inflation" or "core inflation". It is measured as the percentage rate of change of a price index.[1]

Economists agree that high rates of inflation are caused by high rates of growth of the money supply.[2] Views on the factors that determine moderate rates of inflation are more varied: changes in inflation are sometimes attributed to fluctuations in real demand for goods and services or in available supplies (i.e. changes in scarcity), and sometimes to changes in the supply or demand for money. In the mid-twentieth century, two camps disagreed strongly on the main causes of inflation at moderate rates: the "monetarists" argued that money supply dominated all other factors in determining inflation, while "Keynesians" argued that real demand was often more important than changes in the money supply.

There are many measures of inflation, because there are many different price indices relating to different sectors of the economy. Two widely known indices for which inflation rates are reported in many countries are the Consumer Price Index (CPI), which measures prices that affect typical consumers, and the GDP deflator, which measures prices of locally-produced goods and services

Answer 5

Inflation is when the supply of money grows faster than the underlying real growth of the economy it represents. Inflation is usually MEASURED by monitoring price changes of various goods and services, but to say that rising prices cause inflation is a little like saying a rising thermometer causes it to get warm outside.

Answer 6

Inflation is measured by  the change of the cost of a typical consumption basket of goods. That is food, rents, cars, gas, health care etc. The BLS hires people to  "shop" in all regions of the country  finding the prices of good and services, and publishes the number monthly  for the composite (CPI) and for individual categories of goods. They also calculate the GDP deflator which is the change in the cost of domestically produced goods which is used to calculate real GDP growth. For a history of US inflation rates  since 1774 see graph at

http://www.visualizingeconomics.com/2008...