Q what is inflationinflation between two points in time is, Ask an Expert

Economics

Q. What is Inflation?

Inflation between two points in time is defined as percentage increase of price index between these two points in time.

Comments:

Price index is calculated at a certain point in time, inflation over a time period, characteristically one year
Inflation may just as well be defined as percentage change in the price level.
Inflation is independent of which year we use as our base year for our price index.
Youfrequently hear that inflation is 'percentage change in prices'though keep in mind that 'prices' is then short for the price level.
Becausethe price level may be defined in several different ways (using different goods and different weights in the basket), inflation can be defined in several different ways.
if the price index reduces between two points in time we say that inflation is negative or that we have deflation.

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9577245

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