Inflation

• What is the definition of inflation?

  A sustained increase in the general price level, leading to a fall in the purchasing power of money
• What is disinflation?


  A sustained fall in the rate of inflation
• What is deflation?


  Defined as a sustained fall in the average level of prices
• What is reflation?


  An increase in the level of real output following an increase in aggregate demand
• What is hyperinflation?

  • A rapid rise in prices
  • Occurred in Zimbabwe and Germany
  • When this occurs, the value of becomes worthless and people lose all confidence in money both as a store of value and also as a medium of exchange.