Meaning of INFLATION in English


In contemporary usage, a sustained rise over time in the general level of prices, normally measured by a weighted index of prices of a large and representative sample of goods and services (both consumers' goods and producers' goods) regularly traded in the economy under consideration. (In 19th century usage, the term referred more specifically to any sustained expansion in the stock of money available within the economy under consideration -- the eventual consequence of which would normally be a generalized increase in prices.)

When the quantity of money available in the economy begins to exceed the amount that firms and households (in the aggregate) feel they wish to keep on hand to finance their expected volume of trading in the foreseeable future, people tend to increase their rate of spending all at once, shifting the demand curves for nearly all goods and services to the right at the same time and thus driving up the general price level -- which is just another way of saying that each unit of money begins to be worth less than before in its purchasing power. Such an acceleration of spending may happen for any of a number of reasons

English glossary of political economy terms.      Английский глоссарий политико-экономических терминов.