Inflation is a rise in the overall price level from "summary" of Principles of Macroeconomics by N. Gregory Mankiw
Inflation occurs when the overall price level in an economy rises. This means that, on average, prices are higher than they were before. When inflation occurs, each dollar in your wallet buys fewer goods and services than it did before. Inflation is like a hidden tax because it erodes the real value of money. There are various measures used to track inflation, such as the Consumer Price Index (CPI) and the Producer Price Index (PPI). These indices track the prices of goods and services over time to determine whether there has been an increase in the overall price level. One common cause of inflation is excessive growth in the quantity of money. If the money supply grows faster than the economy's ability to produce goods and services, prices tend to rise. This is known as demand-pull inflation. Another cause of inflation is cost-push inflatio...
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