Th2.1: Inflation

Question 1

Define inflation

Answer 1

the general rise in prices of goods and services that erodes the purchasing power of money

or a sustained increase in the general price level

Question 2

Define deflation

Answer 2

the fall of prices and indicates a slowdown in the rate of growth of output in the economy

Question 3

Define disinflation

Answer 3

a reduction in the rate of inflation i.e prices are still rising but not rising by as much