Question

Write as much as you know about Inflation rates from finance. Why is it important and how does it affect us?

Answer 1

Inflation means the rate of change in in prices of of a product due to its demand and supply. It is the rate of increase in the price of goods and services in an economy due to higher demand and higher supplies.

When there is a a easy monetary policy demand in a country is stimulated and it leads to inflation as people are left with more of the disposal income. And when inflation happens, Central Bank increases the interest rate in order to control.

It affects us because when there is inflation the purchasing power of our money is going down because we will buy lower with the same amount of money .

It is important as it is used in various kinds of monetary policies and all other policies formation.