Inflation

Inflation

Inflation

Inflation, can our economy grow without it What is inflation The definition of inflation is ?an abnormal increase in available currency and credit beyond the proportion of available goods.? Although, Webster?s is considered by most to be the overall best dictionary, WordNet states the meaning of inflation a lot clearer by saying, ?it?s a general and progressive increase in prices.? It occurs when the value of goods rises faster than the value of money. The usual approximate measure of this is the Consumer Price Index, which weigh the prices of different goods according to importance in a typical budget and then shows how much the prices of these goods have increased. This immediately raises some problems; for example, the weight of the goods must change over time. The importance of computers was not measured in the price index 100 years ago. Another problem is the failure of the price index to capture changes in quality. The quality of a good may have improved by 20%, while the price has only risen by 10%. The consumer price index doesn?t feel this should be a factor, but many would disagree. Hence, inflation is not easy to define in practice. This should

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