Indian Economy
Inflation
Devaluation of money's purchasing power
Overview
In economics, inflation is an increase in the average price of goods and services in terms of money, though it originally referred to the increase of the money supply that can cause such a universal shift. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money. The opposite of inflation is deflation, a decrease in the general price level of goods and services. The common measure of inflation is the inflation rate, the annualized percentage change in a general price index.
Source: Wikipedia — Inflation (CC BY-SA)
Key concepts
How Inflation connects to the ideas, people and events around it.
Economics is a social science that studies the production, distribution, and consumption of goods and services.
Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context.
Monetary inflation is a sustained increase in the money supply of a country.
A consumer price index (CPI) is a statistical estimate of the level of prices of goods and services bought for consumption purposes by households. It is calculated as the weighted average price of a market basket of consumer goods and services.
A currency is a standardized form of money, in use or circulation as a medium of exchange, for example banknotes, coins, electronic balances in online bank accounts, and central bank digital currencies (CBDCs).
Purchasing power refers to the amount of products and services available for purchase with a certain currency unit.
In economics, deflation is an increase in the real value of the monetary unit of account, as reflected in a decrease in the general price level of goods and services exchanged, measurable by broad price indices.
A price index is a normalized average of price relatives for a given class of goods or services in a specific region over a defined time period.
Revise Inflation
Flashcards and a quick quiz, built from this map.
Questions about Inflation
What is Inflation?
In economics, inflation is an increase in the average price of goods and services in terms of money, though it originally referred to the increase of the money supply that can cause such a universal shift. This increase is measured using a price index, typically a consumer price index (CPI).
What are the key concepts related to Inflation?
The main concepts connected to Inflation include Economics, Money, Monetary inflation, Consumer price index, Currency, Purchasing power, Deflation, Price index. Each is linked on the map above with its own summary.
Which exams cover Inflation?
Inflation is part of Indian Economy, which appears in the syllabus of UPSC CSE, UPSC CAPF, NDA, CDS, AFCAT, SSC CGL and 58 more exams.