Paragraph On Inflation

Paragraph On Inflation: Inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general

 

Paragraph On Inflation 

Paragraph On Inflation: Inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money—a loss of real value in the Internet medium of exchange and unit of account in the economy. A chief measure of price inflation is the inflation rate, the annualized percentage changes in a general price index over time. Inflation’s effects on an economy are various and can be simultaneously positive and negative. Negative effects of inflation include a decrease in the real value of money and other monetary items over time, uncertainty over future inflation may discourage investment and savings, and high inflation may lead to shortages of goods if consumers begin hoarding out of concern that prices will increase in the future. Positive effects include ensuring the central bank can adjust nominal interest rates and encouraging investment in non-monetary capital projects. Economists generally agree that a long sustained period of inflation is caused by the money supply growing faster than the rate of economic growth. The inflation rate in Bangladesh was last reported at 10.20 percent in May 2011. This inflation rate for Bangladesh, which can hardly keep the balance of trade, is a big warning to be cautious right now.