Category: Inflation

Stagflation


Stagflation is a term which is formed by joining the words stagnation and inflation. It is a newly developed term which is used in modern macroeconomics to give a description of a period of uncontrollable price inflation combined with sluggish output growth. Stagflation raises unemployment.

A central bank decelerates growth to bring down inflationary pressures or sometimes allows to raise the price for hastening the growth. The dilemma is that adjusting stagnation can worsen inflation and vice versa.

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Inflation


Inflation means a persistent rise in the price levels of commodities and services, leading to a fall in the currency’s purchasing power. The problem of inflation used to be confined to national boundaries, and was caused by domestic money supply and price rises. In this era of globalization, the effect of economic inflation crosses borders and percolates to both developing and developed nations.

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Categorized as Inflation