Inflation Quiz

Causes of inflation include an increase in the money supply, demand-pull inflation, cost-push inflation, and built-in inflation.

Inflation can lead to a reduction in the purchasing power of money, uncertainty in financial planning, redistribution of income and wealth, and a potential decrease in international competitiveness.

Central banks use monetary policy tools such as interest rates and open market operations to control inflation. They aim to keep inflation within a target range to maintain price stability.

<p>Inflation erodes the real value of savings and investments because the purchasing power of money decreases as prices rise. This can affect long-term financial planning and retirement savings.</p> Signup and view all the answers