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Definition of economic inflation

definition of economics

Economics is defined as carrying out analysis in order to facilitate the use of available resources and these resources include; Land, buildings, equipment and many tools that can be collected in order to create products and services, and the economy is divided into microeconomics and macroeconomics, and they are applied in the stock market, international trade negotiations and commercial deals, so you must know economic inflation in order to avoid it, and the economy works to provide many Methods of solving problems and making sound financial decisions. It shows how to deal with economic inflation. It includes the choices that are made in order to obtain what individuals need in terms of production, distribution and consumption of various commodities.
Definition of economic inflation
Definition of economic inflation

Definition of economic inflation

The economy aims to search for the best ways to use the available materials efficiently and make appropriate decisions. The economy is affected by many factors such as inflation, so you must know the economic inflation, which means: the rise in the prices of goods and services during specific periods of time, where the rise in price affects the reduction in the number of goods and services that It can be purchased in one currency. The definition of economic inflation reduces the purchasing power of money, which loses its real value. The definition of economic inflation includes its measured rate, which is known as the inflation rate, as it is based on calculating the percentage of annual changes in the general price index and the consumer price index, and results in high economic inflation As a result of the increasing growth in the money supply, which is affected by the demand for goods and services, where money growth is faster than the rate of economic growth.

The definition of economic inflation includes many positive and negative effects; Its positive effects include reducing unemployment, which in turn facilitates the central bank’s opportunities to implement monetary policies, and encourages loans and various investments instead of keeping money, while the negative effects of economic inflation appear through the high cost of holding money, which reduces investments, savings and goods. While low inflation reduces economic stagnation, it facilitates the labor market to adjust quickly and thus maintains the stability of the economy, and these monetary policies are controlled by setting interest rates, open market operations and determining banking reserve requirements.

Types of economic inflation

Inflation occurs when the prices of goods and services rise. Inflation is divided into four types according to their speed, which are moderate, strong and severe inflation, and hyperinflation, and the following is an explanation of these types:
Moderate inflation: Inflation that occurs when prices rise by 3% annually or less, as consumers expect prices to continue to rise, which increases demand for it and thus raises inflation.
Strong inflation: It is inflation that ranges from 3% to 10% annually, which is harmful because it increases economic growth rates, which increases demand so that suppliers cannot provide more.
Severe inflation, which exceeds more than 10% annually, which causes money to lose its value, making it difficult to pay costs and prices.
Hyperinflation: It occurs when prices rise to more than 50% per month and is a very rare type that occurs when governments print money in order to pay for wars.
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