Inflation is where prices in the economy as a whole start to increase. This is typically measured using the Consumer Price Index (CPI), which takes a basket of commonly purchased goods and tracks its price movements.



Stagflation is an economic condition characterized by a combination of stagnant economic growth, high unemployment rates, and high inflation.

How is Inflation Measured

How is Inflation Measured

So now we have looked at what money essentially represents, let us look at how inflation is measured. Inflation is usually measured through the CPI, which is based upon a basket of goods.

Burning money, as a representation of what inflation is

What is Inflation

Inflation is created through excessive money creation. That is to say, money supply is in excess of economic output. Let’s say GDP grows at 2 percent. If the money supply increases by 3 percent, we could expect inflation.