Page 124 - Macroeconomics. book docx_Neat

- Expansionary monetary policy (lower interest rates)

- Investment in education and training

- Encouraging private sector investment

- Supporting small and medium enterprises

2. INFLATION

Meaning of Inflation

Inflation is a continuous and general increase in the overall price level of goods and

services over time. Inflation reduces the purchasing power of money.

Moderate inflation is common in growing economies, but high inflation creates serious

economic problems.

Types of Inflation

1. Demand-Pull Inflation: Caused by excess demand.

2. Cost-Push Inflation: Caused by rising production costs.

3. Built-in Inflation: Caused by wage-price spirals.

4. Imported Inflation: Resulting from higher prices of imported goods.

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