Inflation

Question 1

What is inflation?

Answer 1

• Refers to the general increase in prices of goods and services.
• Sometimes the inflation rate increases rapidly in a short period of time. This is called hyperinflation.
  Deflation is when goods and services become cheaper.

Question 2

Why does the inflation rate change from time to time?

Answer 2

The inflation rate increases when the cost of goods and services increases.

Question 3

Why does the cost of goods and services increase?

Answer 3

• Increases of wages and salaries.
• Increase of production costs due to increases in rent , water and electricity or marketing.
• Decrease in productivity, this means that workers produce fewer goods and services while still earning the same remuneration for their efforts. As a result, it becomes more expensive to produce goods.
• Political instability.
• Increase in the fuel price.