ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Key Takeaways. Inflation is an increase in the general prices of goods and services in an economy. Deflation, conversely, is the general decline in prices for goods and services, indicated by an inflation rate that falls below zero percent.

Detailed explanation-2: -Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country. But it can also be more narrowly calculated-for certain goods, such as food, or for services, such as a haircut, for example.

Detailed explanation-3: -Inflation has caused the cost of many goods in the US to increase significantly in the past year. This chart shows the overall price changes of selected goods during this period using data from the U.S. Bureau of Labor Statistics. The most significant change is the cost of school lunches, which rose by over 254%.

Detailed explanation-4: -The demand for goods remains unchanged while the supply of goods decreases due to the higher costs of production. The added costs of production result in higher prices for consumers.

Detailed explanation-5: -Inflation is the general rise in the prices of goods and services in an economy, over a period of time. It reduces the purchasing power of consumers, because each unit of currency can purchase fewer products with an increase in the general price levels.