nflation,in classical economics,is an increase in the total stock of money.As the consequence of that,so called price inflation occurs and is revealed in a rise in general level of prices of goods and services over time.Although "inflation" is sometimes used to refer to a rise in the price of a specific set of goods or services,a rise in price of one set (such as food) without a rise in others (such as wages) is not included in the original meaning of the word.Increases in the price of financial assets (stocks,bonds,etc.) are not included in the calculation of inflation by governmental or banking agencies.
Because of the reciprocity of relation of all prices to the total stock of money in circulation (and vice versa),inflation can be thought of as a decrease in the value of the unit of currency (as much as deflation could be considered as an increase of value of that unit).[citation needed] Inflation is usually measured as the percentage rate of change of a price index[1] but it is not uniquely defined because there are various price indices that can be used,and those used (and those which are excluded) can be used for political manipulation.
Many economists believe that high rates of inflation are caused by high rates of growth of the money supply.[2] Views on the factors that determine moderate rates of inflation are more varied:changes in inflation are sometimes attributed to fluctuations in real demand for goods and services or in available supplies (i.e.changes in scarcity),and sometimes to changes in the supply or demand for money.In the mid-twentieth century,two camps disagreed strongly on the main causes of inflation at moderate rates:the "monetarists" argued that money supply dominated all other factors in determining inflation,while "Keynesians" argued that real demand was often more important than changes in the money supply.
There are many measures of inflation.For example,different price indices can be used to measure changes in prices that affect different people.Two widely known indices for which inflation rates are reported in many countries are the Consumer Price Index (CPI),which measures consumer prices,and the GDP deflator,which measures price variations associated with domestic production of goods and services.
