Stay Healthy and Go Green: Inflation

Stay Healthy and Go Green: Inflation

Inflation based on our wiki, my book, and some websiteIn economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services; on another words inflation is also an erosion in the purchasing power of money a loss of real value in the internal medium of exchange and unit of account in the economy. Inflation''s effects on an economy are manifold and can be simultaneously positive and negative. Negative effects of inflation include a decrease in the real value of money and other monetary items over time, uncertainty over future inflation may discourage investment and savings, and high inflation may lead to shortages of goods if consumers begin hoarding out of concern that prices will increase in the future. Positive effects include a mitigation of economic recessions, and debt relief by reducing the real level of debt. Negative effects will be more severe in hyperinflation, price of goods will be rise very high beyond the capability people to buy, their money value will decrease at the worst level.Commonly it is caused by excessive growth of money supply, too much money in the market. Today economist favors a low steady rate of inflation, because reduce the economic recessions caused by the inflation to the market. Controlling these phenomena is the monetary authorities tasks from central banks (government). They control the size of the money supply through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements.Inflation can be separate into 4 category, light inflation, middle, heavy and hyperinflation. Light is when the rate is under 10%; middle is between 10%-30%; heavy is between 30%-100% and hyper happen when the rate is above 100% p/a. Effect of the inflation will directly affect the economic from the common people, especially people who have fixed rate of salary or have salary but growth at lower rate than the inflation rate.

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