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Types of Inflation: As the nature of inflation is not uniform in an economy for all the time, it is wise to distin­guish between different types of inflation. Such analysis is useful to study the distribu­tional and other effects of inflation as well as to recommend anti-inflationary policies. Infla­tion may be caused by a variety of factors. Its intensity or pace may be different at different times. It may also be classified in accordance with the reactions of the government toward inflation. A. On the Basis of Causes: (i) Currency inflation: This type of infla­tion is caused by the printing of cur­rency notes. (ii) Credit inflation: Being profit-making institutions, commercial banks sanction more loans and advances to the public than what the economy needs. Such credit expansion leads to a rise in price level. (iii) Deficit-induced inflation: The budget of the government reflects a deficit when expenditure exceeds revenue. To meet this gap, the government may ask ...

What Is Inflation? How It's Measured and Managed Definition:  Inflation is the rising price of goods and services over time. It's an economics term that means you have to spend more to fill your gas tank, buy a gallon of milk or get a haircut. Inflation increases your  cost of living . Inflation reduces the purchasing power of each unit of currency. U.S. inflation has reduced the  value of the dollar . Compare the  dollar's value today  with that in the past. As prices rise, your money buys less. That's how inflation reduces your  standard of living  over time. That's why  President Reagan  said, "Inflation is as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man."  Here's more on  how inflation impacts you life . The inflation rate is the percent increase or decrease of prices during a specified period. It's usually over a month or a year.  The percentage tel...